Good news is breaking with regard to new season nitrogen fertiliser costs.
As a result of global urea prices dropping earlier than many had forecast and having peaked at $425/t FOB, Egyptian urea is starting to emerge at $325/t FOB, seemingly because stocks have built up during the political crisis and global demand is down. Of course, to establish an on-farm price you must add shipping, transport, insurance and bagging costs, plus a margin.
Prices are still falling and a floor has yet to be established, and it could be reasoned that it may not fall much below $300/t. This is because producers in regions with high gas costs, like the Ukraine, tend to exit the market at that level. Indeed, there are reports that Interagro of Romania has already temporarily shut down because of elevated production costs compared to revenue.
A FOB price of $300/t for urea, if that is the level, would translate to around £275/t on-farm in the UK. Not surprisingly, the new season market for Urea (46% N) has already been stimulated, with companies such as Gleadall, Thomas Bell and Nidera reported to be active in the marketplace.
Clearly, earlier suggestions of £275/t for new seaon, domestic ammonium nitrate now look on the high side. AN manufacturers are not willing to commit to new season prices this early, but happily acknowledge that current (April) figures are too high for June, and confirm that we are at present witnessing a falling market.Conversions of the above urea prices indicate that £250/t may be nearer the mark for AN (34.5% N) in the new season.