Will the agrochemical market change dramatically in 2021?

Introduction: 2020 is an uneasy year, with changing circumstances and unpredictable events. In the fight against the epidemic, the party and the government attach great importance to agricultural development and food security. First, the agriculture-related industries are included in the primary position of economic restart, and the green channel to ensure the smooth flow of agricultural materials industry is opened. Many agricultural companies have benefited from this and achieved good operating results.

Factors affecting the market situation of agrochemical fertilizers

Agricultural product prices VS grain trade situation

The sudden new crown epidemic has swept the world, followed by natural disasters such as locust plagues, droughts, and waterlogging that swept the world, causing the world to face a huge food crisis. Affected by the epidemic and disasters, countries have restricted food exports, and prices have continued to rise accordingly.

The food situation in China is relatively stable. Although it is also affected by natural disasters, the three major staple foods are completely self-sufficient. Imports of wheat, rice and corn account for less than 3% of the total supply. In 2021, the Chinese government will pay more attention to the planting area of grain and the effective use of arable land. The structural adjustment of grain and cash crops will also become more reasonable, which will be a favorable situation for fertilizer companies.

Agricultural product prices VS fertilizer market

Affected by the epidemic and the adjustment of national agricultural policies, the supply and demand relationship of agricultural product prices will be effectively improved for a long time. This will mean that the area of economic crops has decreased, and the area of food crops has increased. Entering October 2020, domestic food prices will continue to rise, and the price of cash crops will remain stable until 2021. Farmers’ enthusiasm for planting will be greatly increased, and the amount of fertilizer used will increase, but the quality and effect of fertilizer will be required. It will also be improved accordingly, which is a test for the quality and use effect of fertilizer enterprises.

Raw material market VS compound fertilizer price

In 2020, the market prices of urea, phosphate fertilizers and potash fertilizers continued to fall, but after October, the prices rose gradually. Affected by international trade and strong domestic demand for raw materials, demand for raw materials such as nitrogen fertilizer, phosphate fertilizer, and potash fertilizer will continue to rise in 2021, which will contribute to the firming of raw material prices. Except for short-term consolidation in individual periods, a small increase in raw material prices will become the main theme.

Affected by this, the price of compound fertilizer will continue to rise, and the space and time for decline is extremely limited. Under the premise of stable market share, compound fertilizer companies will gradually increase their prices as the main theme.

Climatic factors affect the pressure of fertilizer storage

According to the International Meteorological Organization, the frequency of extreme weather will increase in 2020. Affected by atmospheric circulation and abnormal ocean currents in 2021, drought, dry hot wind, floods, and pests will continue. Therefore, the expectations of the climate environment cannot be too high, and we must be prepared to deal with the impact of extreme climate problems on agricultural planting. Due to the structural adjustment of grain and economic crop planting, the high frequency of natural disasters and the disrupted rhythm of farmers planting crops, it is difficult to form fertilizer orders before the fertilizer season. Short-term supply capacity will pose a severe test to compound fertilizer companies .

Economic operation status VS price index impact

Looking forward to 2021, China’s economy is still facing many uncertainties, such as the international political landscape and changes in the epidemic. China needs to continue to implement precision epidemic prevention and control, further increase residents’ income, release domestic demand, and focus on key industries such as energy and chips. Department’s work. "If all these tasks are in place, and if there are no major shocks and changes in the international situation, China's economy next year should be able to embark on a relatively good trajectory, with a growth rate of more than 7%."

At present, China is still in a state of "M2 is slightly higher than nominal economic growth to reflect counter-cyclical adjustment." It usually takes 1-2 quarters from the increase in currency growth to the increase in the inflation rate. The time lag is when household consumption is still sluggish. It may be longer. Taking into account the recovery of domestic consumption and investment, it is expected that the price index will not rise significantly until the second quarter of 2021.

Compound fertilizer market analysis

In 2021, the fertilizer market is expected to rise in stages, and the general market consolidation is relatively small. The bullish market will be the main theme of the fertilizer market in 2021.

November-December 2020: Prices remain unchanged in October, and the winter storage policies of various companies are operating at a low level, and the number of winter storage by companies and distributors has decreased compared with previous years.

January-February 2021: Fertilizer prices will rise slightly in spring, and will continue to rise in steps, but the magnitude will not be very large.

March-April 2021: Raw material prices continue to rise for a short period of time, with strong regularity, but with a small fluctuation range, and compound fertilizer prices are stable.

May-June 2021: The prices of raw materials are likely to increase significantly. Enterprises will make mid-year policy adjustments. The price policy will focus on delivery and guarantee, and will follow the market.

July-August 2021: The base point price of N, P, and K raw materials will increase slightly, which is basically stable but will exceed the mainstream average price in spring, and the price of compound fertilizer will run at a high level.

September-October 2021: Nitrogen, phosphorus and potassium raw materials will fall slightly due to the impact of international trade, and the price of compound fertilizer will also fluctuate slightly, but the overall price will not fall too much.

Countermeasures for compound fertilizer companies

In the face of 2021, the market will continue to rise, which will test the real soft and hard power of the company. The compound fertilizer industry will reshuffle and accelerate, and fertilizer companies will face unprecedented challenges.

Increase the amount of raw material procurement reserves, use national policy requirements to strengthen stocking and short-term supply capabilities; make more fuss on the tightness of upstream raw material supply and downstream channel network links, increase the benign pass rate of channel direct growers, and strengthen the construction of the industrial chain Ability; strengthen the functionality and use effect of compound fertilizers, research and develop new compound fertilizer products that are more adaptable to regional advantage crops, and gradually change the conceptual operation mode; enterprises and distributors will jointly transform and upgrade to improve the adaptability of compound fertilizer products, Secure the fertilizer market share in the field crop area and strengthen the adaptability of fertilizers in the economic crop area.