The UK fertiliser market is extremely quiet, with further sales not anticipated until January. But this simple statement conceals a global market in turmoil, writes Roger Chesher.

The credit crunch has temporarily reduced worldwide demand for fertiliser to such an extent that the world price of urea fell to values below the cost of production and plants in Italy, Venezuela, Russia and Ukraine have shut down.

The NFU has called for GrowHow to respond to falling energy and urea prices. But, after calls for it to publish forward prices at Cereals 2008, it has contracted gas at forward values and is committed to fulfilling orders at prices which now look expensive.

At last week’s Agricultural Industries Conference, NFU president Peter Kendall called on farmers to honour their existing contracts with GrowHow after all, a deal is a deal.

Strangely, low-priced urea is not abundantly available in the UK 80% of the nitrogen market has gone and few importers are willing to commit to buying a £1.5m cargo. Without this pull-through in the market place, little happens.

Those UK farmers most likely to be affected are larger buyers in the liquid market. Manufacturers of liquids bought raw materials before the slump arrived and buyers are faced with the choice of sticking to liquids or buying cheap urea, a difference of up to 50p/kg to be set against potential losses of 30-40% in yield through urea inefficiency.

fert report