Pakistan boosted DAP inventories in September and finished the April-September kharif season with above-normal stocks of 392,000t, leaving the country well prepared ahead of the seasonal peak in demand in October-November.
Pakistan produced 74,000t of DAP in September, bringing total kharif output to 454,000t, or 27,000t above the 2020-24 average for the season, National Fertilizer Development Centre (NFDC) data show. Imports last month stood at 99,000t, bringing the seasonal total to 401,000t, or 27,000t below the 2020-24 average.
Although combined imports and production are in line with norms, domestic demand was 650,000t this kharif, or 138,000t below the five-year average.
Many cash-strapped farmers kept out of the market or sought alternatives to DAP after importers passed high international DAP costs onto the domestic market. Farmer finances are fragile because major crop prices were low over most of the year, and financial constraints had made the government remove funds supporting wheat farmers.
The underwhelming offtake has allowed Pakistan to boost its inventories over kharif, with rabi (October-March) opening stocks standing at 392,000t, above the 315,000t average in 2020-24.
Importers are now well stocked on DAP and are holding off fresh purchases for the time being. And despite a softening market, historically high prices are sidelining importers, with the latest DAP assessment in the low-to-mid-$760s/t cfr Pakistan, or $117.50/t above the figure a year before at the midpoint, Argus data show.
Domestic offtake is expected to return to normal this quarter.
Water from significant flooding in the third quarter receded to reveal agricultural land in a better state than had been expected. Farmers are now benefiting from a rally in rice, maize, cotton, potato and particularly wheat prices. And the government of Punjab is expected to support farmer fertilizer offtake in the key wheat application season in November by implementing a 3,000 rupees/50kg ($11/50kg) bag DAP subsidy for the month. The government of Sindh is planning its own subsidy programme, although further details are yet to emerge.
A return to normal DAP offtake in the remainder of this quarter could push importers back into the market later this year. Domestic DAP sales in the fourth quarter over 2020-24 averaged 642,000t. With steady domestic output, a return to average demand, and 100,000t of imports in October, according to Argus line-up data, calendar year-end stocks would fall to 73,000t. This means that fresh arrivals will be needed to keep inventories above what is considered safe levels at 200,000t.
