7 June 1996

AN price on a roll

NEW season ammonium nitrate fertiliser prices will start some £20/t above those seen last year, and will continue to rise as the season progresses, predicts Hydro Agris marketing director Tony Robinson.

The recent price slump in urea, a barometer product for N prices worldwide, has already shown signs of recovery, he says, driven by demand from China and India. As a result, the world price of urea has risen $15/t (to about $163/t) in the past three weeks.

Hydro is therefore pitching its late June price at a 10% discount against the spring value of £150/t for big bag AN, putting it at about £135/t.

ICI also issued its price list to the trade this week – a month ahead of the traditional Royal Show launch – at a similar £135/t, plus £3 a month carry.

But some observers believe it could be a struggle to hold these values. Last year early quotes of £120/t to £122/t quickly slipped as Cargill offered its own label product at £115/t.

Imports of AN are still coming in to UK ports from Russia and Bulgaria at £100/t, going on farm at about £112/t, observes Mike Stickland of Britannia Fertiliser Brokers. "Thats a huge differential from domestic producers new season ideas."

But with east European factories about to shut down for maintenance, and with merchants holding only limited stocks of imports, Hydro, Kemira and ICI may try and "tough it out", he suggests, though £130/t is probably more realistic.

Although imported N can peg market prices, Mr Robinson expects that higher world demand and a bullish view of what the UK market can stand will push prices for imported AN to a starting value of about £120/t plus. That will put a reasonable floor in the market, he says.

Longer term, Mr Robinson reckons growers will pay a spring spot price of up to £160/t for AN – a repeat of the 16% rise seen over the past year.

But doubts remain over how attainable that will be, especially with urea now much more competitive than last season and with several major shipments due to arrive during the summer months.