The end of 2020 is approaching and the trade in Replacement Processing Agreements (WVOs) is generally becoming more popular. How is trading going this year and what is expected of prices towards the turn of the year?
Many VVOs are currently being traded, commission agents confirm. Trading is smoother than around the same period last year. This has everything to do with the current supply and the associated price level. There is reportedly a lot of supply on the market at the moment and prices are considerably lower than in previous years.
The processing obligation varies per region. In the south of the country, 59% of the phosphate surplus that cannot be placed on private land must be processed. For the east this percentage is 52% and for the other regions the percentage is 10%
DCA rating lower than usual
The DCA quotation for VVOs fell this week by €0,02 to €0,66 per kilo of phosphate. The price level is 28% below last year's level. Compared to the 5-year average, a decrease of 49,2% is visible.
Normally, VVO price fluctuations only occur in the last weeks of the year, but this is not the case this year. Prices have been stable or falling since mid-2020.
Just a few more weeks to go
Because prices are currently so low, many livestock farmers conclude VVOs earlier than normal, with the thought 'then it's all over'. However, the season still has a few weeks to go. Brokers expect that the price level will not fall further, as is normally the case. This is because current prices are already considerably lower than previous years.