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Fertilizer Prices Seen Static, Softs As Strong Base – PhosAgro

28 November 2011
Dow Jones

Global fertilizer prices will likely stay around current levels in the short term, Russian producer PhosAgro (PHOR.RS) said Monday, days after the company agreed to cut prices to its Indian customers due to the recent sharp fall in the rupee's value. 

Chief Executive Maxim Volkov told Dow Jones Newswires that there will likely be some minor corrections in price like those negotiated last week with Indian Potash Ltd. and the Indian Farmers Fertilizer Cooperative Ltd., but that soft commodity prices will act as a strong base in a fundamentally sound market. 

"We agreed to absorb some of this reduction because you have to respect your biggest customer [and], even if you do not see the fundamentals, he deserves the gesture to help in difficult times," Volkov said. 

He added that IPL and Iffco have committed to purchase additional volumes of fertilizers from PhosAgro and also give increased flexibility over the type of vessel used to make delivery--with dramatic cost differences between handysize carriers and larger panamax vessels. 

Markets will not discount fertilizer prices further as values are supported by soft commodity prices, Volkov said, meaning farmers will remain focused on maximizing yields rather than controlling expenses and cutting back on products. 

"Fundamentally the fertilizer price is currently being supported by the soft commodity prices and we do not see any dramatic increases [in production] or newcomers to the industry in the next few years," Volkov said. 

He added that the company was "absolutely confident" the market had already priced in volumes from the new Ma'aden facility in Saudi Arabia.