Tension continued to run out of the phosphate rights market this week. After a brief rebound, the price was already under pressure last week, signaling buyers to take it easy. If they already have the financial scope to purchase phosphate rights. What does the DCA listing do?
The price of phosphate rights shot up in the last weeks of September by €9 to €150,50 per kilo in week 41. This immediately reached the high point of this year, because from the turn of the month to October, relaxation has entered the phosphate rights market and the price gradually decreases. The DCA quotation for phosphate rights this week is 43 at €148 per kilo, a decrease of €1,00 compared to last week.
The buyers have considerably weakened their interest in phosphate rights, traders and intermediaries say. It is true that batches are still being traded sparsely, but most buyers have already acquired sufficient rights or are waiting for the price to drop further. Sellers, on the other hand, like to stick to the previous price levels, in the hope that they will still bite.
Indirect warning
Various factors can play a role, depending on the dairy farm and its circumstances. What is certain is that many dairy farmers are confronted with extra costs during this period, because the invoices of the contractors for maize chopping and silage fall into the box. The uncertain course of the milk price in this corona crisis may also make dairy farmers decide to be cautious with investments. FrieslandCampina, for example, gave at the beginning of this week an indirect warning for a declining milk price.
It goes without saying that liquidity also plays a role on some dairy farms, especially in these last months of the year. Every euro has to be turned around and sometimes feed factories also act as a 'bank'. The chance that the DCA quotation of phosphate rights will look up again in the coming weeks therefore seems extremely small. Especially now that it seems that more clarity will be provided about nitrogen rights in the coming weeks.