20 October 1995

Set-aside cut expected to boost AN demand

AMMONIUM nitrate could peak at £145/t in the spring, ICI Fertilizers commercial manager Stuart Beer said last week.

Pointing to the cut in set-aside to 10%, he said this could bring another 1.5m hectares (3.7m acres) of land into production across Europe – equivalent to 600,000t of AN consumption.

Within the UK alone, the resulting increase in demand could be up to 50,000t, he said.

Reduced AN imports to the UK, re-direction of urea to the Far East and increased fertiliser usage by an optimistic farming industry will contribute to the tight market balance this season, he predicted.

The price of urea – which in 1994 reached a 14-year high – is also a factor, he added.

With about 60% of the market committed, AN prices were currently in the £125 to £128/t range. By Christmas, £130/t was likely, said Mr Beer. And despite earlier predictions of £135/t for the spring, he now considered that £145/t was "perfectly possible".

The low stock situation, meanwhile, was likely to mean that short-term regional shortages could occur, further underpinning prices.

The continual closing of the AN supply and demand gap across Europe would maintain the current upward price trend until at least after 2000, he predicted.