Fertiliser price pressure is building

Fertiliser price pressure is building
23rd Sep 2011

 

With merchant's holidays over and autumn drilling underway, the fertiliser season is gearing up for quarter four, the last big tranche of business before Christmas, writes The Farmers Weekly commentator, Roger Chesher.


Although trading is quiet at present, there are signs of activity as farmers move to grab domestic ammonium nitrate at £347/t before the end of the month. GrowHow has already signalled increased prices for October (£352/t) and November (£357/t).

These price rises are underpinned by the continuing strong demand for nitrogen, mainly urea, throughout the world. When set against a weak supply situation, this means prices will rise - AN prices in France rose more than €20/t last week.

Indeed, at $550/t fob, urea is close to its high point of the year (last June) but a weaker pound will push new cargoes above £400/t on farm.

Urea coming out of store, or arriving at previously lower purchase prices, can be had under £400/t, and likewise imported AN at £320-330/t. Tonnages at these prices are finite and prospects for cheaper supplies before Christmas are grim. International forecasts place urea as high as $600/t fob in this period.

 

On a more positive note, forecasts for the second quarter of 2012 indicate a significant falling off in price, fine for those purchasing new season nitrogen, but by the time the boats turn up it could be too late for spring top dressing.

Thus we could see quite a flurry of market activity next week before price rises bite, and through into October and November.

Interestingly, there are few, if any, reports of increases in compound fertiliser prices. These could be imminent as quarter four increases for potash and sulphur are on the cards. Potash is set to rise by €20/t and ammonium sulphate (21N:60SO3) by €15-20/t. Such rises are unlikely to trigger a spending spree in the compound sector, other than for oilseed fertiliser, as grass producers have little storage space with clamps full of silage and barns loaded with winter feed.

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