Since its industrialization by Bayer in 1971, glyphosate has gone through half a century of market-oriented competition and changes in industry structure. After reviewing the price changes of glyphosate for 50 years, Huaan Securities believes that glyphosate is expected to gradually break out of the bottom range and usher in a new round of business cycle.
Glyphosate is a non-selective, internally absorbed, and broad-spectrum herbicide, and is also the largest herbicide variety in global use. China is the world’s leading producer and exporter of glyphosate. Affected by high inventory, overseas destocking has been ongoing for over a year.
At present, global demand for glyphosate is showing signs of recovery. We estimate that overseas restocking will gradually stop and enter a replenishment period in the fourth quarter, and replenishment demand will accelerate the recovery, boosting glyphosate prices.
The judgment basis is as follows:
1. From the export data of Chinese customs, it can be seen that Brazil stopped destocking and entered the replenishment period in June. The replenishment demand of the United States and Argentina has been fluctuating at low levels for several consecutive months and showing an upward trend;
2. In the fourth quarter, countries in the Americas will gradually enter the planting or harvesting season of glyphosate demand crops, and glyphosate use will enter a peak period. It is expected that overseas glyphosate inventory will rapidly consume;
3. According to data from Baichuan Yingfu, the price of glyphosate for the week of September 22, 2023 was 29000 yuan/ton, which has fallen to the historical bottom range. Under the pressure of rising costs, the current gross profit per ton of glyphosate is as low as 3350 yuan/ton, which has also fallen to the bottom of the past three years.
Judging from this, there is not much room for the price of glyphosate to decline. Under the triple factors of price, demand, and inventory, we expect overseas demand to accelerate the recovery in the fourth quarter and drive the market for glyphosate to reverse and upward.
Extracted from Hua’an Securities article
Post time: Sep-27-2023