Glyphosate’s Great Rebound: Glyphosate Market Update
1 October 2012 Glyphosate has had an interesting few years. Coming off an anomaly record year in 2008, the global value for glyphosate has declined from $6.5 billion at its height to about $4 billion in 2010.
By contrast, other top active substances have displayed steady increases in global value from 2008 through 2011. Azoxystrobin, for example, has grown about 33% in global value since 2008. Other actives have increased more modestly, but they have maintained a positive upward trend in value.
The most troubling reality to glyphosate’s doldrums is that demand has been on the steady climb during its price slump. So volume sales have risen while profits have declined.
But it appears that glyphosate’s lackluster performance is at a welcomed end. Global value began a slight upward trend last year, and the rise in value is expected to continue in 2012.
The story behind the meteoric rise in glyphosate was fairly simple: Underproduction in 2008 decimated the value chain and left a vast inequality between supply and rising demand. As manufacturers reacted to the price spike amid lower stocks in late 2008 and 2009, oversupply drowned the value chain, lowering prices and encouraging distributors and traders to overstock inventories. Consequently, there were no buyers for the new supply that was coming online in large volumes.
“The crash came quicker than the increase, and we’ve been dealing with the hangover ever since,” Monsanto Global Glyphosate Lead Dean Hendrickson said at the FCI Trade Summit in Miami in August. “But we are starting to see things uptick.”
The soft rebound during the past two years is a bit more complicated. At least some of the explanation lies with the world’s largest manufacturer. Monsanto will produce more than half of the world’s glyphosate supply in 2012, and it is priced at less than one-third of its peak of $8.05 per liter in 2008. Given this, it’s no surprise more that more than 40% of glyphosate’s global value crumbled under the weight of market pressures.
While Monsanto’s price points have been in line with the market for the most part, it has continued to lower its price in the United States, the world’s largest consumer, steadily since 2009. Generic producers began to raise prices beginning in 2010, and they have risen slowly since then.
Monsanto has continued to lower its price in the United States to almost mirror the price of generic formulations. That strategic decision to garner market share has affected global value.
Read more about glyphosate in the October issue of FCI.
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