Farmers vie for new season fertiliser

The 2006/2007 fertiliser market season has started with a bang, both literally and metaphorically.

An explosion at Terra’s Teesside ammonia plant when a pressure vessel gave way was repaired with a minimum of production loss, but a wave of publicity.

The new fertiliser season had started a month earlier than usual and farmers were suddenly attuned to the possibility of missing out on new prices, should there be a shortage following the breakdown.

Business in the first month has been described as “furious”, even though the price is some £15 greater than last year.

Domestic ammonium nitrate is now priced at £152-155/t on farm and for each month until Christmas it is set to rise by £3 per tonne.

Producers’ determination to match sales with monthly production volume, ensuring that price reflects energy costs, looks set for an early test as buyers vie for June and July deliveries.

Unlike last year, there is a genuine alternative to domestic AN in the form of granular urea at £168/t plus, whereas imported AN is not yet attractively priced.

Available from July there is some speculation that prices will drop, but they do not, it vital that buyers have a watertight contract to lock in prices.

Traditional buyers of granular urea are committing rapidly with those that choose according to price differential rapidly following.

Although down in volume by 10-15% on last season, sales of grassland high-nitrogen compounds are in full swing.

Prices have dropped a little from last month thanks to fierce competition amongst the blenders.

Having bought raw materials well, blenders are able to pass the benefit to customers but low prices in this sector are unsustainable.

Replacement nitrogen will be costly and there are significant increases in the cost of potash expected in June and July.

But the sad fact is that in the midst of all this frantic trading activity, no one is making more than the barest margin, with merchants working for as little as £2/t.

CURRENT PRICES (£/t)

Great Britain

Ireland

†Note in the Republic of Ireland nutrients are expressed as elements not oxides.  Analyses will not be directly comparable with those used in the UK.
*Known as 24.2½.10 blend in the Republic of Ireland
**Known as 27.2½.5 in ROI

Note All illustrated prices are based upon 24 tonne loads for immediate payment. Prices for smaller loads and those with credit terms will vary considerably.

Source: Bridgewater