The Ex-Factory Price of DAP Remains Steadily High, While the Wholesale Price Shows A Sign of Decline

Since Since January 2021, domestic DAP has risen rapidly due to various factors such as huge international demand and rising prices of other fertilizer varieties. The domestic average ex-factory price has risen from 2395 yuan/ton in December 2020 to 3050 yuan/ton in March 2021. In April, the domestic ex-factory price of DAP remained high, but since late March, the market wholesale price has been loosened. According to data from the Agricultural Material Circulation Association, the DAP price index reached a high of 3,307.24 at the end of March, and then gradually fell back to 3,244.13 at the end of April, a decrease of about 1.9%.
At present, the ex-factory price of DAP steadily high, and the wholesale price has fallen. The main reasons are:
Production companies have sufficient orders and have a strong attitude to hold the price. At present, the domestic spring plowing will gradually come to an end. Therefore, traders' demand is limited, and manufacturers will shift their focus to exports. Besides, some companies have sufficient orders, so they suspend quotations and orders to complete domestic pending orders and export orders. There is no sales pressure for the time being. Under the circumstances, the ex-factory price of DAP remained high.
There are many influencing factors for the drop in the wholesale price of DAP. First, it is because of the partial substitution relationship between DAP and compound fertilizers. Under the premise that the price growth of compound fertilizers this year is significantly lower than that of DAP, farmers in some areas choose compound fertilizers, so the demand for DAP is squeezed. Second, because the previous low-priced sources still exist in the market, distributors sell at lower prices when their profits are relatively ideal, resulting in an inversion between wholesale price and ex-factory price.
Under the current situation of strong international demand for phosphate fertilizer, it is expected that the domestic ex-factory price of DAP will continue to remain strong in the short term, and it is difficult for the market wholesale price to see a huge drop.