Recently in fertilisers Category

Irish food and agri-business Origin Enterprises is to buy the fertiliser division of Carrs Milling for £19m.

CM Fertilisers is based in Scotland and northern England and provides branded specialist fertilisers, plus integrated nutrient management systems to the arable, grassland, horticulture and forestry sectors.

Origin said the acquisition, which is subject to shareholder approval, would strengthen the group’s existing position in the UK. Origin Fertilisers already has several sites in the UK involved in the blending and distribution of agricultural fertiliser.

Carrs Milling will hold a general meeting to approve the transaction on 13 July 2011.

The world’s second largest ammonium nitrate producer has become the first foreign company to join the UK’s Fertiliser Industry Assurance Scheme.

Russia-based Uralchem Trading SIA passed certification under the FIAS scheme, which aims to assure fertiliser security and traceability.

Uralchem started supplying the UK market in 2008, but GB agent Graham Dunn said the FIAS assurance would “substantially support our drive to be a leading manufacturer of plant nutrients for UK agriculture”.

The firm also said its FIAS certification would be increasingly important as the European Commission had started to define an equivalent pan-European assurance system.

In 2010 the Uralchem’s supply of fertilisers to British and Irish markets accounted for nearly one-third of its overall supplies to European markets.

Kansas-based Koch Fertiliser has completed its acquisition of UK blender and distributor J&H Bunn, including its subsidiaries.

“We’re pleased to be integrating J&H Bunn’s terminals and its distribution and blending capabilities into Koch Fertilizer’s global network,” said Steve Packebush, president of Koch Fertilizer. “J&H Bunn has a long history as a highly respected independent fertiliser distributor in the U.K. market.”

J&H Bunn was founded in 1816 in Great Yarmouth and employs about 150 people at 7 sites.
“Koch Fertilizer values our agronomic and blending capabilities and plans to retain the Bunn-related brand names,” said David Harrod, a UK director for J&H Bunn. “J&H Bunn’s customers should see welcome benefits from this unique combination of our local and global fertiliser capabilities and our shared commitment to customers. The Bunn management and operational teams will also help ensure continuity for our customers.”


 

 

I used to have a theory about fertiliser prices, which dates back to when I first started on Farmers Weekly in the mid-1990s.

At that time the cost of FW stood at 90p and the price of domestic ammonium nitrate was, if my memory serves me well, about £90/t. The following season the FW cover price increased to £1 and the fertliser price posted a similar increase to £100/t, and the season after that the values were £1.10 and £110/t respectively.

The pattern was obvious and, had I bothered to project forward to 2010, I might have got the FW cover price right at about the £2.50 mark. But my fertiliser projection would have been way out as volatility kicked in.

Since then, however, I have noticed another pattern, and that is that the price of fertiliser now seems to be linked to the price of grain.

This is strange really, when one considers what the major drivers are in the respective markets.

Currency clearly affects both as the relative strength of the US$ affects all commodities.

But for fertiliser, the number one factor is the price of natural gas and this depends on the fundamentals of supply and demand - how much the Russians are sending down the pipelines and whether the economies of the west and south-east Asia are growing or shrinking...

 

Gleadell Agriculture's fertiliser trader Calum Findlay has just alerted us to the fact that potash prices have increased in Europe by €8/tonne and, while this is not reflected in today’s prices, it will at some stage once the blenders start buying replacement.

“Phosphate prices are showing signs of firming as South American and US buyers are active in the market, taking cover for the expected autumn demand. Stocks in the US are running at 20% below where they normally are going in to their summer re-fill," he says. 

Meanwhile, GrowHow and Yara have released August nitrogen terms at £4/tonne more than July, mirroring prices released in France earlier this week. But urea prices appear to have stabilised with July tonnages now mostly sold out.

One has to admire Norwegian fertiliser manufacturer Yara's sense of "sang-froid" given all that has happened in the past six weeks.

At the time of its initial bid for US rival Terra Industries in early February, the company insisted it was "business as usual" as far as it's UK operations were concerned.

That was fair enough given that the deal was pretty much a done deal and bearing in mind Yara's existing relationship with Terra - the joint venture they have in GrowHow UK.

But then came news in early March that there was a rival bid on the table, from US fertiliser giant CF Industries, and that this bid was a superior bid.

Yara's response to what must have been a severe blow to the corporate knackers was a controlled "no comment" while directors conducted an evaluation.

And now the news has emerged that Terra has terminated its proposed merger with Yara (worth $4.1bn) and entered into a definitive merger with CF Industries (worth $4.7bn)...

This week's announcement that the country's two major fertiliser suppliers Yara and Terra are to merge is hardly a major surprise.

Since Yara took over Kemira in 2007 and became a joint venture partner with Terra in GrowHow, many in the industry have considered it just a matter of time before the companies cemented their relationship.

Yara has always been seen as "acquisitive" and eager to grow its 7% share of the world market to something in double figures - and this takes it another, significant step on the way.

It is understood that the planned merger with Terra will give it 9% global market share.

More importantly, it will also give the combined group a 30% stake in the US market and this is where Yara sees the greatest opportunity for growth and profit.

But what will it all mean for British farmers....

With the festive season fast approaching, I thought I'd get my crystal ball out and predict some prices for six month's hence.

It's never an easy task. Just one look at the price graphs at the back of Farmers Weekly is enough to demonstrate the rollercoaster trip that agricultural markets have been on over the past couple of years.

Furthermore, as one leading banker recently told me, "if there's one thing you can guarantee about forecasts, it's that they'll be wrong".

So, spurred on by this vote of confidence, I can now reveal that, at the end of June 2010, the following values will prevail:

Feed wheat (FW ex-farm price) £107/t
Nitram (GrowHow price)           £205/t
Finished lambs (R3L carcases) 440p/kg
Red diesel (FW IPM price)      49p/litre
Bank of England base rate        0.75%
Euro:Sterling exchange rate       86p

 

But what are your predictions? Why not jot them down in the comment section below, or e-mail them to me at philip.clarke@rbi.co.uk, and I'll come up with a small prize for the closest prediction in six months time. What have you got to lose, apart from your pride and dignity?

2009 has been a year of ups and downs in the world of agri-business. Prices have reached record highs for some commodities, and dismal lows for others.

Some businesses have gone to the wall, while others have flourished.

But how much do you remember from the past 12 months? Are you a "Business Numpty" or a "Business Genius".

To test your knowledge, I have devised the following quiz:

Economics is undoubtedly a complicated subject.

It's been a long time since I studied it in any formal sense, but I can just about remember the theories of opportunity costs and marginal gains, even if the detailed econometric formulae I could once rattle off have long gone.

But as a former student of economics, I was somewhat dismayed by a comment from Barclays Bank agricultural specialist Martin Redfearn at today's (Tuesday's) HGCA outlook conference in London.

According to Mr Redfearn, "if you could teach a parrot to say the words 'supply' and 'demand' you could give it a mortar board and call it a professor of economics".

The remark seemed somewhat dismissive of all the years I spent studying the subject, though it has to be said, he does have a point....