13 October 1995

Trade predicts £135/t for spring AN

FERTILISER manufacturers believe they are on target for a spring value for ammonium nitrate of over £135/t.

Having started the season at £115, AN is now trading on farm at around £125, with many farmers reported to have taken advantage of the early ordering discounts.

Similar price increases are expected for compounds, according to Kemira commercial director Bob Chorlton, who recently released list prices to the trade. Current quotes are at £135-£140/t for 20:5:5 and £138-142/t for 20:10:10, with an aspiration to reach £145 and £150, respectively, by the spring.

Well documented

The reasons for these increases are well documented. Ammonia prices have risen from $90/t in 1993 to $240/t now on the back of higher gas prices in the former Soviet Union and reduced production capacity. This has combined with strong world demand for nitrogen, either as AN or urea, especially from China and south-east Asia.

The story is similar for compounds, with strong demand for phosphate and potash at home and abroad. The reduction in set-aside to 10% is a new factor in the UK market, and could lead to an 80,000t increase in fertiliser demand this season.

But Mr Chorlton is not optimistic about any significant uptake of compounds before Christmas, despite the 7% early discount on offer. "Most grassland farmers do not really have the facilities to store fertilisers," he says. "There is no culture of taking it early."

Longer term, he believes prices could drop back as planned investments around the world lead to extra capacity.

But these will take a number of years to come on stream, during which time Mr Chorlton expects fertilisers to trade between a £115/t "floor" and a £150/t "ceiling".