Grain and oilseed prices rise, but agrochemical demand remains weak — Jefferies

Global prices for major crops rose sharply in the September quarter, but this has yet to translate into a recovery in crop protection demand. According to analysts at investment bank Jefferies, wheat prices increased by 30% year on year, soybeans by 22%, and corn by 19%.

Jefferies linked the rise in crop prices to supply chain disruptions in the Black Sea region and the conflict in the Middle East. At the same time, demand for agrochemicals remains weak, putting pressure on crop protection manufacturers.

One sign of the weak market was a 15% year-on-year decline in Chinese crop protection exports. Jefferies noted that such a drop after roughly 2.5 years of strong growth points to subdued global demand for agrochemicals.

Meanwhile, prices for major agricultural inputs changed much more modestly. Glyphosate prices rose by 5% year on year, DAP by 3%, while urea prices declined by 2%. A weak monsoon in India and heat waves in overseas markets also weighed on agrochemical demand.

Jefferies expects weak demand to affect the financial performance of major producers as well. PI Industries’ revenue could fall by 8% year on year and EBITDA by 30%, while UPL is expected to post a 5% decline in revenue and a 6% drop in EBITDA.

Tags: Agrochemistry, crop protection chemicals, Jefferies, corn, grain, prices, soybean, oilseeds, wheat