Agrochemical demand remains weak despite rising global crop prices

Global crop prices rose significantly during the September quarter, driven by supply chain disruptions in the Black Sea and conflicts in the Middle East. Wheat prices increased 30% year-on-year, while soybean and corn prices rose 22% and 19%, respectively.

Despite these price surges, demand for agrochemicals remains weak. This trend is attributed to subdued monsoon conditions in India and heat waves in international markets. The decline in demand is further evidenced by a 15% year-on-year drop in Chinese crop protection export volumes.

This divergence is expected to impact the September-quarter earnings of Indian agrochemical companies. Jefferies projects that PI Industries could see an 8% decline in revenue and a 30% drop in operating profit. Similarly, UPL is projected to face a 5% revenue decline and a 6% drop in EBITDA, with double-digit volume declines expected in both India and Latin America.