More volatility in heated fertiliser market

Demand and availability of food to feed the world is now driving fertiliser costs far more strongly than energy prices, high though they may be.

The situation is greatly exacerbated by politically motivated expansion of the production of biofuels, utilising land which might otherwise produce crops, and crops themselves are increasingly being used to feed livestock for the more sophisticated palates of developing nations.

The result is already being referred to as a crisis of sorts, the resolution of which is not yet clear. Already one leading academic, Jaap Schroder from Wageningen, asserts that mankind has reached the stage where choice is inevitable between maintaining biodiversity or feeding the world. Decisions on a global scale are needed and fall outside the four year decision making life cycle of the average politician. Who will make these decisions?

Already China has decided that her priority is to feed herself. Further exports of fertiliser have now been effectively blocked by the imposition of an export tariff of between 100 and 135%, effective this week.

This means that a 2.4Mt volume of urea, equivalent to taking two plants out of production, will not be on the market until October 2009 when the tariff is due to expire. Not surprisingly this caused the nitrogen price to rocket by a further $100 dollars overnight with urea now standing at £600/t in some markets.

Of greater concern is the availability of P and K relative to current great demand. Phosphate is largely supplied by the OCP (Morroco) and China. Supplies of rock are finite and limited and increases of mining capacity are resultant, ultimately, on governmental decisions. But why undermine such a rewarding price by mining more?

Broadly similar factors apply to potash.

Phosphate refiners have an added problem with escalating costs of ammonia and sulphur, both essential in their processes.

Domestic fertiliser industries across the world have no choice other than to live with this situation and respond to current global raw material prices. The result is quite extraordinary farm prices for domestic N, P and K.

£320 for ammonium nitrate and possibly, now, a seamless transition into prices for the new season, forget any thoughts of rebates!

Pricing in Ireland is complex and volatile and the figures in the table are to a certain extent historical. Shop around but don’t delay is the best advice.

At the moment it seems that only at the point when returns on crop sales fail to support these increases in nutrient costs will we experience a downturn in fertiliser prices.

Great Britain

Ireland (All prices volatile)

†Note in the Republic of Ireland nutrients are expressed as elements not oxides.  Analyses will not be directly comparable with those used in the UK.
*Known as 24.2½.10 blend in the Republic of Ireland
**Known as 27.2½.5 in ROI

Note All illustrated prices are based upon 24 tonne loads for immediate payment. Prices for smaller loads and those with credit terms will vary considerably.

Source: Bridgewater