5 April 2002

No spring rush for fertiliser

By Robert Harris

FERTILISER prices have flattened out over the past few weeks as the long-awaited spring rush on nitrogen failed to materialise.

Makers have been forced to peg prices at or below January levels, with nitrogen sales running 250,000-300,000t below the predicted 2.1m-tonne market.

This leaves farmers with some better-than-expected buys this month. Top quality UK N during April can be bought for £113-115/t, about £10/t less than manufacturers had expected in their pre-Christmas forecasts, and £20/t below last years levels.

Compounds have tracked nitrogens value, and are down by a similar amount. Complex 25.5.5 is available for £113/t, the same as in January.

Imports are also under pressure. Independent consultant Roger Chesher, of Bridgewater Partnership, reports a boatload of granular urea in Southampton which is slow to find farm buyers at £118/t, even though that is at least £2/t cheaper than January.

"Within a month, the majors have switched from predicting a 250,000t peak this spring to a flat market. Although some makers are still optimistic, volumes are now unlikely to be large enough to stimulate a price rise this month," he says.

Manufacturers will try to raise prices again in May to provide a decent platform for new season prices, he adds.

The main fertiliser companies may have underestimated the on-farm tonnage of nitrogen carried over from last season, says Mr Chesher.

Another suspicion is that poor crop prices mean many farmers may be applying less nitrogen than normal.

Robin Shackleton, Hydros business manager, believes more arable growers are buying nitrogen as they need it. "Fertiliser is now pretty much sold on a cash basis, with payment in the month after delivery. Looking through our order book, some very large orders placed last year have been replaced by several smaller ones this season."

He predicts April and May will be busier than last year as delayed purchases materialise. Merchants say there is still some buying to be done on arable farms, and livestock farmers have also been slow coming to the market, says Mr Shackleton.

Farmers hoping that poor spring fertiliser sales will lead to more stocks and cheaper new season prices are likely to be disappointed, says Mr Chesher.

"Lower usage will certainly help to peg new season prices, but circumstances are now quite different to two or three years ago. Hydro will simply not import material, and Kemira and Terra will send product elsewhere."

Mr Shackleton predicts that nitrogen will rise by £4-5/t in May. "It will end the season at the £118-120 mark. That should give a new season level of £108-110/t." &#42