Chemicals Sector Update : Crop & Chemical Dashboard: Farm economics under pressure by Kotak Institutional Equities
Crop & Chemical Dashboard: Farm economics under pressure
Prices of numerous crops softened last month in international markets amid continued pressure on farm economics. India is reportedly unwilling to yield to US demands on corn trade—a key stumbling block in trade negotiations. Yet, India’s chemical exports recovered 9.4% mom and 17.9% yoy in Nov 2025 after a very weak Oct 2025. Meanwhile, prices of battery chemicals and HFC refrigerants retained recent gains amid broader softness.
Agriculture markets: Crop prices come under pressure in US markets
Prices of numerous crops came under pressure in the US during the past month—soybeans shed 6.4%, despite the US-China trade thaw, as the markets focused on Brazil’s looming harvest and uncompetitive US prices. Coffee prices plunged 13.2% in the month, given an outlook for ample supplies. US wheat and rice prices also fell 4.5% and 5.8%, respectively. USDA WASDE data for Dec 2025 showed an uptick in the stock-to-use ratio for Indian rice, but little change otherwise. Excessive rainfall has continued into the Rabi season in India, with more than 50% of Indian states having received above-normal rains since Oct 1. Yet, Rabi crop acreages are higher by 1.4% yoy as of Dec 19. Meanwhile, Skymet has warned of a “growing risk of a subpar 2026 monsoon” amid evolving El Nino conditions. Skymet sees a 60% chance of subpar rains.
India’s exports of chemicals rose 18% yoy in Nov 2025 off a low base
India’s exports of organic and inorganic chemicals for Nov 2025 rose 9.4% mom and 18% yoy, while imports dipped 8.7% mom and 7.1% yoy. The sharp increase in exports comes off a depressed base, both yoy and mom—Nov 2025 exports remain 3% below the average of the preceding 12 months. US chemical exports fell 1.8% mom and 4.8% yoy in Sep 2025. Worryingly, US chemical imports fell even more sharply, declining 8.5% mom and 16.6% yoy, with agricultural chemicals suffering the largest decline. However, data on the production and price front were not as bad—US chemical production rose 0.6% mom in Sep 2025, following two months of back-to-back declines. The inventories-to-sales ratio for chemicals in the US rose to 1.09 from 1.07 in August; a year ago, the ratio was 1.17.
Comments on chemical price trends
While chemical prices are not showing a broad-based recovery amid sluggish demand and continued overcapacity in China, a few specific areas where prices have firmed up are HFC refrigerants and more recently, battery chemicals. The price rise in the former has been led by quota restrictions under the Montreal Protocol, whereas the recent spikes in the latter are due to China’s inclination to crack down on overcapacity and restrict exports as a geopolitical tool. Prices of a few agrochemicals have softened such as clethodim has corrected by 18% in the past quarter after having rallied on supply constraints. Basic chemical prices generally remain soft, except for bromine, which rose 23% in the past three months. China’s soda ash prices do not show any signs of recovery, while international phenol spreads remain weak.
Above views are of the author and not of the website kindly read disclaimer
