Fertilizer prices in the domestic market are expected to continue increasing in the short term even after three months of consecutive price hikes, according to Rafael Ribeiro de Lima Filho, analyst with consultancy Scot.

In addition to stronger demand for fertilizers globally, the primary reason for the price hikes, raw materials also have a significant influence on local price adjustments.

“The strengthening of the dollar in the first months of the year in comparison with November and December of 2009 has also contributed to price increases,” de Lima told BNamericas.

The analyst pointed out that as Brazil is highly dependent on imports of fertilizers, adjustments on the international market have a considerable effect domestically.

In addition, as prices fell by as much as 50% in 2008, the market itself is providing corrections this year.

Phosphate fertilizers prices saw the sharpest hikes this year. The product is 27% more expensive in March compared to December last year. Compared to February, prices increased 10%.

Nitrogen fertilizer prices rose on average 12.4% from December through March. Month-on-month, the increase totaled 4%. Ammonium nitrate, for example, is being sold for 800 reais/t (US$446/t) this month.

Potassium fertilizer prices accumulated an increase of 6.1% in the first three months of the year. In March alone, prices increased 2% over February.

In the coming months, domestic demand, especially for nitrogen and phosphate fertilizers, will continue pushing prices up. Growing demand in the US will also drive further increases internationally, de Lima added.

According to the analyst, despite the hikes projected for this year, prices are expected to stabilize at a lower level than seen in 2008, when strong demand resulted in high commodity prices in general.

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