Glufosinate Oversupply Creates Overcorrection in Market
23 August 2023 Glufosinate, one of the most widely used herbicides on the planet, is under assault from several directions.
Oversupply, regulation bans, global geopolitical conflicts, and resistance concerns all play in the pesticide’s current struggles.
Jim DeLisi, Fanwood Chemical
“It would appear that both glufosinate and glyphosate are currently in an oversupply situation,” said Jim DeLisi, Founder of Fanwood Chemical. “Imports of both products fell sharply in the last couple of months. In the case of glufosinate, imports from the secondary suppliers have almost disappeared, while the primary suppliers, BASF & UPL have continued to import, though at reduced rates.”
Melinda McCann, Head of Business Excellence and Strategic Alliances, ADAMA US, echoed concern about oversupply and suggested that could lead to another problem that might arise if the industry doesn’t proactively manage the situation. “The market needs to evaluate each active ingredient and determine if we will be in an oversupply situation or if the supply will not arrive in time due to manufacturing plants making to order,” she said.
It appears that the oversupply situation will continue for some time.
“The molecule is still expanding but not as fast,” said Bob Trogele, Chief Operating Officer and Executive Vice President, AMVAC. “The main competitor glyphosate is still cost effective and the regulatory headwinds it faces have slowed. I still see the glufosinate technology growing. We at AMVAC are focused on broadening the weed spectrum by combining the molecule with other herbicides via our newest Prolease technology.”
Some of the factors that led to glufosinates growth no longer exist or have been outpaced by new considerations.
“Until 2019, the growth of the glufosinate market was mainly due to the huge gap left after the withdrawal of paraquat from the market,” said David Li, Marketing Director, SPM Biosciences (Beijing) Co., Ltd., and author of the monthly China Price Index column. “The rapid growth of the glufosinate market had led to significant price volatility. The Chinese market started capacity expansion from 2015. In 2022, the total designed capacity of glufosinate in China exceeds 150,000 Mt. The current effective production capacity of glufosinate has also exceeded 100,000 tons. It can be said that the potential of glufosinate is overestimated in the Chinese supply market. If glufosinate is not renewed, it will be a disastrous chain reaction for Chinese companies. Continued investment and process improvements over the past nearly a decade would have turned into silent costs.”
Due to oversupply the price has dropped, says Abhijit Bose, Chief Marketing Officer, Tagros Chemicals India Pvt Ltd. “Glufosinate Tech 95% Tech prices had dropped below $10 in July 2023,” he said. “North America alone had imported 66% less glufosinate YOY 2023.Supply has been more than the demand, which had slowed down drastically in 2023.”
GLUFOSINATE OVERSUPPLY PRICING
The many issues that have affected the ag industry in general have certainly not excluded glufosinate. Pricing fluctuations, for example, have been “dramatic,” Li said. “As a result of the Lier Chemical accident (a fire at a plant in June), the EXW price of glufosinate surged to EXW US $59 Kg in mid-2021. When China’s glufosinate production capacity was released, the price quickly fell back. The August Free on Board (FOB) price of glufosinate in China is around US $7.7 Kg. During the COVID19 pandemic, supply chain uncertainty fueled huge fluctuations in the price of glufosinate AI.”
David Li
While a rapid drop in prices might hurt manufacturers’ bottom lines, end users certainly benefit from the decrease – at least in the short term.
“On the other side of coin, the collapse in China’s glufosinate price has, to some extent, resulted in cost savings for farmers around the world to use the molecule,” Li said. “But the large-scale application of glufosinate has also created challenges for resistance management. Those weeds that are resistant to glufosinate become an almost insurmountable problem for farmers.”
AVAILABILITY
And while it might not be the lead story on the nightly news, the war between Russia and Ukraine has affected glufosinate trade.
Abhijit Bose, Targos Chemicals India
“Exports of glufosinate tech and formulations to Russia and Ukraine from India are partially affected,” Bose said. “Regular exports from China to Russia are taking place. Reduction of cultivation areas in Ukraine have small impact on glufosinate.”
Currently, there’s more product available than there is need.
“The total effective production capacity of glufosinate AI l in China’s supply market reaches about 128,000 mt,” Li said. “The whole supply market is facing overcapacity. In the absolute red sea competition, the price is set by the largest capacity holder. Supply and demand have lost control here. And the white-hot competition in the Chinese market is mainly aimed at squeezing high-cost capacity out of the competitive market. This state of affairs will continue in coming years until the biggest producers dominate the upstream and downstream of glufosinate production. If that happens, the pricing heading up would become true.”
“The biggest risk right now may come from the fact that some previous producers, despite having their own production facilities, have had to choose to outsource externally due to the higher costs of self-production during the period of sustained low prices,” Li continued. “They have also, as a result of their behavior, been largely excluded from being competitive producers.”
RESISTANCE
Resistance is another concern for many veteran users of the herbicide.
“Certain weed species like rye grass (Lolium perenne), goosegrass (Elusine indica), and a few other weed species are showing resistance against glufosinate,” Bose said. “Agricultural university and research institutions are recommending switching of herbicide molecules, IWM (Integrated Weed Management) programs to manage the resistance.”
Chinese companies are searching for resistance solutions as well.
“Resistance to glufosinate is coming to the forefront step by step,” Li said. “Some generic companies are actively looking for solutions. Mix formulation with multiple mechanisms of action is the current sub-optimal solution. For example, the most difficult grass weed for glufosinate to fight in practice is Eleusine Indica in China. This grass is generally resistant. A more practical control method is glufosinate and clethodim. Of course, many companies are willing to develop PPO herbicides to solve the resistance problem, such as saflufenacil.”
For every problem, someone looks for a solution. Glufosinate resistance is no different.
“Among the Chinese companies, Jiangshan Group’s novel molecule SY-1604 could be a very competitive PPO herbicide in future,” Li said. “Changling Liu’s R&D and discovery team from Shenyang Sinochem Agrochemicals R&D Co., Ltd. chose saflufenacil as the lead compound, invented a new type of inactivating herbicide, SY-1604 by adopting the “Intermediate Derivatization.” The patented technology of this product has been exclusively licensed to Jiangshan Group, which has started the new project of such novel molecule in the second production base, and it is expected to be listed in the market in 2024. Not only that, Jiangshan Group reached a cooperation agreement with Syngenta to jointly develop Sy-1604.”
REGULATORY CONCERNS
Following a recent trend for synthetic chemistries, the European Union (EU) no longer allows the use of glufosinate. When contacted about the herbicide a European Commission spokesperson responded, “We unfortunately cannot share more, as this substance is not authorized in the EU.”
Glufosinate is certainly not the only herbicide to face restrictions or outright bans, and in some places, those challenges have improved the market for glufosinate, Bose indicated.
“Restrictions of usage of paraquat, and 2,4-D in certain crop segments and countries have given a boost to glufosinate,” he said.
Where the regulatory environment is less restrictive, glufosinate is seeing growth Bose said: “Usage is increasing in Africa and Asian countries, areas where glyphosate resistance in certain weed species is pushing farmers to look at glufosinate as an alternative.”
GLUFOSINATE OVERSUPPLY: LOOKING AHEAD
Despite the current challenges, the glufosinate market is expected to grow to $3.27 billion in 2027 with a compound annual growth rate of 6.8%, according to a report from the Business Research Company.
Bob Trogele, AMVAC talks oversupply and other issues during the 2023 AgriBusiness Global Trade Summit.
And at least one multinational recently introduced a new glufosinate product to the market. BASF recently announced “a new L-glufosinate ammonium (L-GA) active herbicide formulation will significantly reduce the amount of active ingredient required, saving operating costs as well as contributing to more sustainable distribution and application than today’s solutions. Farmers can expect this new L-GA formulation from mid-decade and onwards, starting in the United States.”
AMVAC’s explains Glen Donald, Director, Portfolio Strategy and Business Development, explains how the new form of glufosinate differs from the current offering: “The currently produced glufosinate ammonium active ingredient is a 50/50 mixture of D and L isomers,” he says. “Only the L isomer is biologically active and the other half is not. New production technology provides for production of nearly 100% L- Glufosinate.”
According to Trogele, the new form of glufosinate “will be interesting as it may lower the cost significantly making it more competitive to glyphosate and perhaps more effective in our Prolease combinations.
Li summed up the pros and cons for glufosinate:
Disadvantages:
- Increase in resistant weeds.
- Market development of more efficient one, like L-glufosinate
- PPO herbicides as alternatives to glufosinate
- Price volatility of glufosinate is increasing the management of supply chain risks.
- Safety assessments and regulatory risks
- Development of digital farming technology, trend of reduction of pesticide inputs
Favorable factors are mainly:
- Adequate supply of glufosinate raw material at low prices
- Glufosinate remains an effective burndown herbicide with the ability of quick weed control.
- Strong promotion of GM seeds with glufosinate traits
- Novel mix formulations are under development.
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