By Jean-Paul MacDonald
Farms.com
The agricultural industry is currently grappling with a significant challenge as prices of glyphosate, a widely used herbicide, plummet due to an oversupply issue. Ag chemical suppliers and retailers are grappling with surplus glyphosate inventory, prompting them to drastically cut prices in a bid to reduce their stockpiles.
Despite an explosion at a Dow Chemical plant in Louisiana, industry experts at Rabo AgriFinance assure us that agricultural input availability will not be affected. However, the incident has drawn comparisons to the supply shockwaves experienced in 2021 when Hurricane Ida severely impacted Bayer's largest glyphosate plant, causing supply constraints. This coupled with COVID-19 restrictions in China, hampered glyphosate production, resulting in increased prices.
According to Sam Taylor, Farm Inputs Analyst for Rabo AgriFinance, the recent incident at the Dow Chemical plant is not expected to disrupt the ag input supply chain. However, the hurricane and ongoing production limitations in China have continued to impact the industry.
Glyphosate prices are witnessing a significant decline due to excess supply rather than weak demand. The key factor behind this oversupply is the resurgence of Chinese production, which accounts for approximately two-thirds of global glyphosate production.
As Chinese manufacturers have ramped up production, global benchmark pricing has dropped by around 25%, from $16-17 per gallon in 2022 to less than $4 per gallon in China.
To address the surplus inventory, retailers and suppliers are slashing glyphosate prices and introducing promotional offers to expedite sales. This price reduction is evident for both generic and branded glyphosate products, offering farmers an opportunity to procure the herbicide at considerably lower costs.
Looking ahead, Taylor suggests that the supply surplus and consequent low glyphosate prices are expected to persist throughout 2023. The excess inventory accumulated by input suppliers, coupled with global production dynamics, will likely continue to impact wholesale and retail prices.
The agricultural industry is currently navigating a complex landscape, influenced by global factors. Adapting to this environment, industry players are exploring the use of artificial intelligence and predictive tools to better understand and forecast market dynamics, ensuring a more efficient and sustainable approach to ag retail operations.