Prices for VVOs are steadily rising

In the fertilizer quotations of DCA Markets also contains the listing for VVOs. This quotation has been increasing quite consistently from week to week since week 25. It is a big turnaround, because there was virtually no trading at the beginning of the year. In week 36 the quotation is €1,94 (with a bandwidth of €1,50 to €2,50 per kilo of phosphate). At a price above €2, a new record is set. 

Scarce supply
In practice, the top appears to be the price at which processors want to do business. The supply is therefore scarce. This is further reinforced by the attitude of the processors. For example, manure processors have had tight margins in recent years. At certain times, the price for VVOs could not even compensate for production costs. Now that shortages are looming, processors are only prepared to provide supplies at the right price.

Research shows that many offers are no more than fictitious offers, because there are hardly any VVOs available through the trade. However, livestock farmers have so far been reluctant to buy VVOs, because they still hoped for a price drop. Now that this is becoming less and less likely, the desire to buy is starting to increase.

In recent weeks, in addition to dairy farmers, more pig farmers have also entered the market. The volumes that pig farmers buy are between 1.500 and 6.000 kilos of phosphate. Dairy farmers often require smaller volumes.

Costly challenge
Without an interim status regarding the processing and an image of the effect of sampling by third parties on the available VVOs, it remains a guess as to what the new balance will look like. The big question is whether there will be enough VVOs? However, it is certain that prices will continue to rise, making compliance with the processing obligation an expensive challenge in the first instance.