28 July 1995

Cost of ammonium nitrate set to rise?

By Tim Relf

FARMERS could be paying up to £140/t for ammonium nitrate next spring, according to Tony Robinson, chairman of Hydro Agri UK.

Speaking as the 1994/95 season draws to a close, he said after earlier estimates of a UK demand of 2.5m tonnes, the final volume looked set to be 2.38m tonnes (a rise of 6% on the previous year).

The increase had been due to:

&#8226 Reduction in set-aside area.

&#8226 Increased winter cereal.

&#8226 Improvements in grain prices.

&#8226 Higher farm profitability.

&#8226 Extended grass growth resulting from last years long autumn.

"Demand is likely to remain high in the 1995/96 season and prices will continue to firm," he predicted. Demand could even rise to 2.5m tonnes if there is a further reduction in the area of set-aside.

Capacity reductions throughout the European industry had seen the removal of more than 1.5m tonnes in the past 18 months, said Mr Robinson.

And European prices, throughout the second quarter of 1995, had been about 20% higher than last year.

Languished behind

But Mr Robinson said that prices had "languished behind" most farm input costs. For winter wheat, it represents only 9% of production costs, he said. "Yet for this crop, every pound spent on fertiliser, gives over £4.50 in profit.

"We are still a market under threat, particularly from imported Russian AN," he added. "And we are looking forward to anti-dumping measures which should put a floor in the market."

&#8226 Hydro Agri – the agricultural division of Norsk Hydro – announced on Monday an operating income of NKr 1641m (£167m) in the first half of 1995, compared to NKr 974m (£99m) over the same period last year. The results have been helped by firmer prices, resulting from a more balanced supply and demand.