Urea off-take for July was recorded at 0.34 million tons. Urea off-take in July has never been lower than this since 1996. Not that it came unexpected. Because, the urea off-take in the preceding month had crossed an all-time monthly high of million tons. Budget, subsidy and anticipation all contributed to heavy pre-buying in June, which normalized in July.

The 7MCY17 off-take has improved by a healthy 17 percent year-on-year. But this is not necessarily reflective of a good calendar year in terms of full year urea application. Last year was an exceptionally weak year in terms of urea off-take, and the base is too low, to rejoice over the double digit growth this year.

The 7M off-take still hovers around 5-year CAGR of 3.1 million tons, which suggests CY17 may not be the year to receive 6 million tons of off-take, after early signs of encouragement in the first half.

Recall that there was heavy anticipatory buying in June and continuation of subsidy surely played its role, as did the clearance of stock at discounted rates.

Urea inventory levels have also come down considerably to around 1.1 million tons. Whether the momentum could be maintained for the coming months of the season is anyone's guess, but the price trend suggests that farmers would not mind buying at these rates.

All this while, the phosphate fertilizer application has been heartening. The subsidy on DAP seems to be yielding better results than that on urea, as there is a visible and much-needed improvement in the NP application ratio. Improved and balanced fertilization should ideally result in improved farm yields, and better economy to enable farmers absorbs any price shock that may come in the future.

DAP of—take for 7MCY17 at nearly 0.9 million tons is a massive improvement from the 5-year CAGR of half a million tons. This is easily the bet performing 7M calendar year period in traceable history; subsidy and low international prices have both played their part.

Copyright Business Recorder, 2017