By: Marte Nicolás Vega Román, President of CAADES
One of the main factors that determine the performance of a cropare the fertilizerswhich are also the main line of costs of the technological package of the grain. The main chains of fertilizers are the Nitrogen, Match, Potassium and the Sulfurand there is a global interconnection of these that impact their markets in a differentiated way.
Mexicoin the context of free tradeimports most of its consumption, especially in the last three years when we reached levels of import 73 percent, so prices are largely determined by the dynamics of the world market. The main import origins are Russia and Chinaand USESand in the case of ammoniaour main supplier is Trinidad and Tobago.
Derived from the crisis of COVID-19 and the war between Russia and Ukraine and extreme weather events, a general rise in the price of fertilizersenergy and food around the world and of course in Mexico at the end of 2021 reaching its highest level during 2022, having in Mexico a decrease in the fertilizer price index in 2023 of 75 percent and in the first quarter of 2024 of 18.8 percent. However, prices still remain significantly above pre-pandemic levels, that is, they remain high, especially in relation to the price of grains, which have decreased to a greater extent.
In the case of agricultural cycle 2023 – 2024 in Sinaloa, there are other factors that explain the behavior of prices, especially for ammonia, urea and ammonium sulfate. In the case of ammonia, since PEMEX was the only supplier of both domestic and imported production, it had some problems in supplying both imports and the national market of Cozoleacaque Veracruz, which meant that distributors had to go to obtain ammonia supplies from industrial use coming from Lázaro Cárdenas, which is more expensive for reasons of VAT and freight, in addition to inconveniences in maintenance maneuvers in the port of Topolobampo, which implied a higher price for the farmer.
In the case of Urea, the uncertainty due to lack of rain in 2023, both nationally and in the case of Sinaloa, made it difficult to estimate the planted area, which is why importers were very cautious when purchasing this granules, which It also implied problems at times of shortages and prices.
As for Ammonium Sulfate, which is widely used prior to the establishment of crops such as corn, wheat and rice, this year it will have restrictions due to the tariff that was imposed in May, which was 35 percent with the intention of stimulating national production, this is already reflected in the drop in imports in April and May despite having more attractive prices than last year and Mexico being a highly deficient country in fertilizers, which contributes to making the cost of the fertilizers.
Although the international trend in fertilizer prices is clearly downward, in the case of Mexico, we must take into consideration, as already mentioned, the logistical aspects in the case of PEMEX nitrogen and the behavior of the rainy cycle, which would give greater certainty in the planning of imports of these inputs and which will be decisive in ensuring that there is sufficient supply and taking advantage of downward price trends, especially at these times where the commodity markets grains do not favor the producer.
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