Farmers hoping for a significant dip in ammonium nitrate prices in the new season are in for a shock.

Terra, the UK’s market leader in nitrogen fertiliser, announced today (19 May) that it was setting the price for June at £155/t on farm, broadly in line with the current value.

Rival firm Kemira is expected to follow suit.

The move would lead to a price of £170/t by Christmas, said fertiliser director Stuart Beer.

Ironically, the market has been brought forward by one month enabling spot users to take advantage of “attractive new season pricing”, as Terra puts it.

Prices are actually £19/t more than the cheapest price at the start of last year’s new season, when early sales rocketed and manufacturers sold their pre-season allocations very quickly.

Tight ammonia supply and very high gas costs form the background to the new pricing regime.

“It is disappointing that world nitrogen prices are being pushed up by energy costs at a time when UK farmers’ output prices are under so much pressure,” Mr Beer said.

“With increased energy costs, a key factor is to manufacture at maximum levels during the summer months when energy costs are at their lowest.”

Over the past season, that policy had enabled Terra to limit price increases to 10%, while the comparative energy cost had risen more than 45%, he added.

Marcus Themans, NFU spokesman on farm inputs, said the prospect for farmers was not pleasant.

“Such prices are hardly surprising when the price of fuel is where it is.

But, for the sake of customers, fertiliser manufacturers need to be explaining things better.”

Mr Themans said he would like to see a free global market for ammonium nitrate, in the same way that ammonia was traded.

For example, fertiliser manufacturers could buy Russian ammonia as a raw material for use when gas costs were high, but farmers had to pay a levy on Russian AN, he said.

Importers seem reasonably relaxed, waiting to see if the price will stick.

A more pressing issue for them is whether exporters, like last season, are prepared once more to absorb anti-dumping levies.

These stand at €47/t, but the value appears higher as the dollar weakens.

The level at which prices have been pitched comes as no surprise to the trade.

Already there are reports of large volume buyers being offered tonnage at “trust” prices of £152/t, where farmers commit an order with a price indication only.

fwbusiness@rbi.co.uk