30 June 1995

£115/t-plus likely for starters in firm but stable season

FERTILISER markets are set to remain firm, but stable for the coming season.

Early indications are that domestic manufacturers will be looking for about £120/t for AN in the next couple of months, with an aspiration for £130/t by the end of the year.

But merchant reaction is that these levels will be hard to achieve. "They have to start somewhere and if they start high at least they can afford to come down," said one southern counties merchant.

With farmers holding back, he anticipated a maximum opening price of £115/t – about £10 above the current import value.

Leading merchants Cargill and Dalgety were more bullish, suggesting £115-120/t was attainable in the coming months. "Manufacturers will be looking to encourage some early sales to get farmers to take product off their hands and so reduce storage costs," said Cargill fertiliser manager, Richard Sunderland.

But Robin Shackleton of Hydro-Agri said manufacturers were not in a hurry to sell, but were waiting for a final agreement on a new minimum import price for Russian AN to the EU. Meanwhile, there was no sign of world ammonia prices dropping from a 10-year high of $250/t.

The economic reasons for the manufacturers buoyant outlook were spelt out in more detail by ICI Fertilizers commercial manager, Stuart Beer, at a recent London briefing.

Within the UK, demand had risen to 2.5m tonnes in 1994/95 – some 10% ahead of forecast. The cut in set-aside to 12% and an increased application rate on winter wheats – estimated at 14kg/ha (11.2 units/acre) extra – were the main reasons.

Less over-capacity

Within the EU, over-capacity had reduced very dramatically, from a peak of 3.3m tonnes in 1992/93 to 1.6m tonnes last year (less than 20%). EU stocks of fertiliser are also at their lowest level for 20 years.

Having realised about £22/t more for fertilisers over the past season, (in line with the $80/t increase in ammonia prices), Mr Beer said manufacturers would be looking for another £10 by next spring. That meant a starting price of £120 now.

Kemira has also come out with starting price this week, at £121/t for AN delivered July, paid December. Hydro-Agri is waiting for next weeks Royal Show to issue its list values, but will be in line with this quote.