Analysis Milk
Phosphate price is rising by leaps and bounds
The phosphate price has risen sharply in recent weeks. At the beginning of this year, the price of purchasing rights was at a low point, but this week it reached and even surpassed the 2021 record. This belies the claim that the rights are "used up."
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The reason for the high prices is indeed scarcity in the market, but scarcity is a relative term. If prices are high enough, new supply will naturally arise, as this week's events demonstrate.
At its peak this week, purchase rights were sold for €190 per kilo. The average price is slightly lower, but buyers are actually paying much more per kilo than €187,50 or €190, as they also face a 30% reduction in price.
The price of leasing rights is also very high, at around €73 to €74 per kilo. However, leasing is very limited.
The supply of phosphate rights usually comes from farmers who are (slowly) phasing out their phosphate production, which seems obvious. However, sometimes it also comes from participants in a phasing-out scheme. This may sound strange at first, but the government only purchases rights up to a certain limit. Above that limit, there's sometimes some left over. In the current market, this can sometimes yield a nice windfall for the seller.