A GRIM PROSPECT faces spring fertiliser buyers as the forward price for gas continues to fluctuate with wild volatility.
Today, UK manufacturers will use gas costing about 25p/therm to make fertiliser to fulfil existing orders.
To stimulate new orders, they must establish a new price structure going through until the spring.
Therefore, it is necessary to have a clear idea of the cost of production from January onwards.
Some producers may well have some January gas booked at a reasonable price – last year it was 32p/therm.
But more gas is likely to be bought on the spot market. This could be reasonably priced, as in a mild winter, or may be prohibitively expensive in a hard winter.
In a very hard winter it may not be available at all. Finally, some will be booked around now for January 2005.
And here lies the problem because forward prices are unsustainably high, at around 80p/therm.
Importers like Yara are not immune to these high prices.
Although their continental gas supplies are currently cheaper, they face a doubling of energy-based shipping costs for raw materials and finished product.
Even when spring prices are published at the end of this month, values may continue to fluctuate.
Imports are currently also hard to read, with no clear view for the spring.Availability is poor and prices high.
Prilled urea is $300/t in dock at the UK. With bagging, transport and other charges this would cost £198/t on farm.
Little is being bought in Europe and when demand starts, prices will rise further.
Lithuanian AN would be £140/t in November were there demand. But without demand it will go into store thus adding £5/t immediately.
Farmers may well balk at spring prices, which will sharpen agronomy skills significantly.
Nitrogen (Domestic) N (SP5) 34.5%
Imported AN Lithuan
No market yet
|Trace elements||0.24.24||TSP (47%P2O5)||Muriate of|
|Copper, zinc, selenium,|
cobalt Iodine and sodium Per acre pack £11.10
|Blended £130-5||£142 rising||£131|
Benchmark prices. Compounds out of season.
Urea, existing stocks only
CAN, large price variations
27. 2.5 . 5
(dependant on source and quality)
€200 import blend
*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.
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.