Crunch time for nitrogen buyers

By Roger Chesher

“CRUNCH” time for nitrogen buyers is now, because the big jump in price is due next month when the majors expect to move up 6.00/tonne against the 2.00 per month so far.

With only an estimated 50-60% so far delivered on farm, there are still many farmers who either are prepared to pay the extra, or who believe they will be able to buy cheaply in the spring.

So who is right?

First, there is currently no shortage of imports.

Whereas in July and August, imports were hard to get, they were entering the UK in quantity in the third quarter to the extent that an estimated 280,000 tonnes of the required 500-600,000 tonnes of material has now been imported.

But, with so little having been delivered to farm, much of the imports are sitting in warehouses preventing the balance from arriving.

While clearly there will be no supply problems in January and February, there is still at least a 220,000t shortfall to import which now presents logistical difficulties.

In fact the whole industry is once more citing logistical difficulties as fewer hauliers find it worthwhile investing in the training required to legally carry fertiliser.

This story has been heard so often with little practical affect that farmers accuse the industry of crying wolf, but a hard look at the true situation would indicate that the wolf really could bite hard very soon.

Additionally, there are increasing rumours of an embargo on Russian exports, as happened in the last three years, to ensure supplies for their own farmers.

We should also remember the strength of the Pound and the fact that higher fertiliser prices throughout Europe are a more attractive market.

The net result of all this is that we will almost certainly witness a balanced market, which means the new price structure should stick and the majors stand a chance of a modest profit this year.

If the price does fall, the industry will lose its final shred of credibility and one doubts if farmers will ever consider buying early again.

Meanwhile, compounds are moving steadily on o grassland farms as the big N standoff continues.

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