DAP sales record gigantic growth in April

[LahoreEstate]

By Muhammad Yasir

KARACHI: Sales of Di-Ammonium Phosphate (DAP) witnessed a whopping growth of 722 percent in April 2009 compared with last years on its bulk consumption in seasonal crops and lower prices.

National Fertilizer Development Centre (NFDC) released sales statistics Monday showed the DAP posted sales surge in April. The sales in first four months of calendar year 2009 reached 239,000 tonne, registering 142 percent growth as compared with same period of last year.

Dealers said that this surge in demand is due to the timely announcement of wheat support prices by the government.

They forecast DAP sales would ensure better fertilizer mix in the months to follow if the existing price of both commodities and crops remains same. Farmers prefer DAP on Urea despite comparatively high prices as it ensures better yields.

DAP sales dived last year as its prices rocketed to Rs 3,500 per 50-kg bag that included Rs 750 subsidy. This spike in price forced formers to rely on urea, which was available at lower prices.

The mix was also deteriorated during last year due to delayed in announcement of crops support prices. The urea to DAP ratio rose to 7:1 in 2008 as against a prescribed ratio of 3:1, it is learnt.

Farhan Rizvi an analyst said the stable DAP price outlook could fuel consumption, which would help sustain bumper crop for next year- a welcome news for agriculture and economy. Given the cyclical nature of the fertilizer utilization, May remains a lull period as procurement activity for the Rabi seasons kicks off around June while procurement for Kharif is generally completed during the first quarter, he added.

Also, the urea sales witnessed 8 percent growth in April 2009 as compared with same month of last year, reaching 422,000 tonnes.

Despite higher prices, the offtake in the Jan-April stood at 2 million tonne up 9 percent year-on-year. On the flip side, the urea off take witnessed the declining month-on-month trend by 9 percent.

Analysts see rebound in urea sales from coming June onwards once the Rabi season sowing kicks in. Farhan said the government has continued its focus on the agriculture sector that bodes well for the fertilizer offtake outlook in 2009 and beyond. This coupled with low DAP prices around $330/tonne (down 71 percent from peak) is likely to ensure significantly higher off take YoY.

After analysing the data for Jan-Apr, it is estimated that urea off take would be around 5.9 million tonne up 8 percent YoY while DAP is expected to witness a major jump of 40 percent with a likely offtake of 1.1 million tons, he further said.

The fertilizer off take stood at 2.5 million tonne in Jan-April 2009, up 16 percent compared with 2.1 million tonne last year. While off take witnessed an upward trend on year-o-year basis, the situation was expectedly different on a month-o-month basis as off take recorded a decline of 11 percent.

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