anz global outlook for fertilizers, page-34

The problem is Rod, the report is factually incorrect. Regarding the Chinese phosphate industry which I follow quite closely, RP output has been flat the last couple years. Its absolute bollocks that it will increase 15 million tons. China went from exporting > 5 million tons in 2006 and 2007 to only 1 million tons this year based on a government quota. It is actually irrelevant how much Chinese domestic output will increase when the government plans to move to out right restricting exports of RP. Even the point on the low season DAP and MAP export window is rather meaningless cause Chinese producers cant make a profit at the current international price.

The broker has provided a very simplistic top down analysis with un-suported data concluding that supply > demand equals lower pricing. A much better broker would look at bottom up analysis on farm economics that will show you at current grain prices, for all the major phosphate using grains (corn, soybeans, wheat, sugar cane etc) there is already a compelling return on investment for farmers to use phosphate fertilizers well above current prices. You essentially have to believe that grain prices will go down from here to disagree with that.