Demand decline prices have steadily increased --- next year's Suzhou agricultural capital market forecast
In 2006, the agricultural product market in Suzhou is expected to show a general trend of declining demand, coexisting resources, and steadily rising prices. This shift reflects changes in farming practices, resource availability, and input costs.
Fertilizer supply is becoming more constrained. With farmland area shrinking and rural farming structures evolving, the total chemical fertilizer demand in Suzhou is projected to decrease by approximately 8% compared to the previous year. However, due to rising costs of coal, electricity, and oil, fertilizer prices are anticipated to increase. In the fourth quarter of 2005, urea producers attempted to lower prices to improve cash flow, which was unusual given the rising raw material costs. As a result, urea prices are expected to continue rising in 2006, with tight supply conditions. Meanwhile, the demand for ammonium bicarbonate is forecasted to drop by about 7% due to structural adjustments in planting and increased use of compound fertilizers. However, many manufacturers had previously shut down or converted production, leading to a significant reduction in current market supplies. Given that Suzhou faced a shortage in 2005, it is expected that the supply and demand for ammonium bicarbonate will remain relatively balanced in 2006.
Compound fertilizer is gaining popularity among farmers due to improved scientific farming techniques. Sales of compound fertilizer are expected to rise by around 15% in 2006. At the same time, the amount of phosphorus fertilizer used by farmers is likely to decrease by about 30%, while potassium fertilizer demand is expected to increase by approximately 20% due to the expansion of high-value crops. Although there is a significant potassium deficiency in local farmland, the market is expected to meet the demand without major issues.
Pesticide supply and demand are expected to remain stable. After years of rapid production growth, the market had experienced oversupply and intense competition. To address these challenges, many pesticide manufacturers have restructured their products and focused on more efficient and safer formulations. As a result, the pesticide market is expected to be well-balanced in 2006, with prices remaining generally stable. Demand for high-concentration, low-use, and low-toxicity pesticides is projected to grow by about 20%, while traditional pesticide demand is expected to decline sharply. Sales of biological pesticides have also increased slightly, but they still account for only about 5% of total pesticide sales.
The agricultural film market is showing signs of recovery. As Suzhou continues to adjust its planting structure in 2006, the area under economic crops has expanded, and most of these crops require the use of agricultural films. This has led to an approximate 6% increase in demand for agricultural films. However, rising plastic raw material prices are expected to push film prices up by about 8%. The market is also shifting towards more diverse and versatile film products.
Medical supplies, particularly pest control equipment like sprayers, are experiencing a gradual decline in demand as agricultural mechanization increases. Still, these tools remain essential for farmers in pest management. While the overall market supply is expected to meet demand in 2006, spare parts may be in short supply, making maintenance more challenging.
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