Fertilizer prices seen to drop by 30% in Dec.

MANILA, Philippines - Prices of petrochemical fertilizers are expected to go down by as much as 30% this December as prices of oil — the main input in these fertilizers — continue to ease, an industry official said Wednesday. "[Fertilizer] prices in the international market are going down and, consequently, local prices will go down," Lewis K. Aligaen, assistant vice-president of Atlas Fertilizer Corp., one of the largest fertilizer importers in the country, said in a phone interview. Mr. Aligaen explained that fertilizer prices will go down only by December amid weeks of easing oil prices, because "many companies have [already] bought fertilizers at previous high prices two months ago." Price of Dubai crude, the benchmark for local fuel pump prices, has fallen to $63 per barrel from the average price of $95/barrel last September, and from a peak, so far, of $140.80/barrel last July 3. Companies first have to sell their stocks before they import a new batch of fertilizers, Dario C. Sabularse, deputy director of the Fertilizer and Pesticide Authority, said in an interview. "We are waiting for how low international prices will hitbut we are positioning to buy during the first week of November, which [the shipment] will arrive here in December," Mr. Aligaen said. He added that quoted free-on board prices of urea, a petro-chemical fertilizer, from Russia have dropped to $500 per ton from $800/ton in July. The drop in prices of fertilizers, which account for up to 30% of crop production costs, will likely increase farmers’ use of the farm input, Roger V. Navarro, president of industry group Philippine Maize Federation, Inc., said in a separate phone interview. "If prices of [farm] inputs will go down, corn planters from Luzon and the Visayas will be able to use more fertilizers," he said. Last July, the Agriculture department received reports of a 30% drop in fertilizer use by farmers, as prices of these fertilizers had risen to P1,600-P2,000 per bag from P850/bag a year ago, data from the Bureau of Agricultural Statistics (BAS) show. The government is likely to miss its full-year palay production target of 17.3 million metric tons by 2.1%, while corn production is expected to fall short by 5.4% from the annual target of 7.4 million metric tons due to high farm input costs, BAS data show. — Neil Jerome C. Morales, BusinessWorld