A production line of Petrovietnam Fertiliser & Chemicals Corporation (DPM) in the southern city of Can Tho (Photo: VNA) According to FPT Securities Co (FPTS), more frequent rainfall may happen incentral and southern Vietnam as a result of the La Nina weather phenomenon, andeven during the dry season in the Central Highlands, leading to an increase inthe area for agricultural cultivation and therefore demand for fertiliser.
The La Nina phenomenon can trigger storms and tropical depressions in the EastSea more frequently. These are also likely to affect the Vietnamese mainlandmore than usual, mostly towards the end of the year, the company said.
The second favourable factor is the current high price of agriculturalproducts, which facilitates cultivation and the need for fertiliser.
By 2020, the price of agricultural products in the world increased sharply asdemand for food hoarding soared due to the COVID-19 pandemic. As of November2020, world rice prices had jumped by 33 percent compared to January 2016 andby 16 percent from the same period in 2019. Corn and soybeans also saw priceincrease of 14.5 percent and 33.1 percent, respectively.
The export price of white rice in Vietnam is currently at the highest level inthe past five years. As of early December 2020, Vietnam's export price for 5 percentbroken white rice jumped to 516 USD per tonne, up 45.4 percent year-on-year and26.2 percent higher than the average of the last five years. The current riceprice is higher than the mark of 450-490 USD per tonne for the same productfrom Thailand and 376-382 USD per tonne of rice from India.
According to the Report on Commodity Market Outlook released in November 2020by the World Bank, the world rice price in 2021 is expected to reach an averageof 498 USD per tonne, 21.8 percent higher than the five-year average from 2016-2020.
Rice is the crop with the greatest influence on fertiliser demand in Vietnam.High rice prices encourage farmers to increase production and expand cultivatedareas. With the favourable weather conditions in 2021, farmers are predicted tobe in great need of fertiliser.
According to AgroMonitor, total fertiliser consumption in 2021 is expected toreach 10.3 million tonnes, up 5.5 percent compared to 2020. Consumption of mostfertilisers is forecast to increase significantly compared to 2020, especiallydiammonium phosphate (DAP) fertiliser up 12 percent, phosphate fertiliser up8.7 percent, NPK fertiliser up 4.6 percent, urea fertiliser up 0.5 percent,potassium fertiliser up 2.4 percent and other fertilisers up 10.3 percent.
In 2020, shares of Petrovietnam Fertiliser and Chemicals Corporation (DPM)increased 58 percent, shares of PetroVietnam Ca Mau Fertiliser JSC (DCM) soaredby 126 percent and shares of Binh Dien Fertiliser Joint Stock Company (BFC)also recorded an impressive increase of 70 percent.
Despite the poor business results in 2020, shares of Lam Thao Fertilisers andChemicals JSC (LAS) still recorded a rise of 17 percent.
LAS faced many difficulties in competing with high-quality products ofcompetitors in the northern region - the main market of LAS. The inability tocut selling and administrative expenses also led to a drop in its profit,making a loss of 4.7 billion VND in the first nine months of 2020./.
VNA
