Fertiliser prices lower than expected

Arable farmers’ costs look substantially better after Britain’s biggest fertiliser manufacturer announced a new season price well below what many were expecting.

GrowHow UK‘s Nitram (34.5%N ammonium nitrate) is priced at £178/t delivered for June, based on 24t loads and including merchants’ margin. The company’s prices for July and August have also been published at £180/t and £182/t respectively.

The firm’s marketing manager Ken Bowler said the lower new-season prices reflected lower prices of imported urea at £220/t and available bulk French ammonium nitrate (33.5%) at €160/t wholesale.

Coupled with this, sterling was strengthening against the dollar so urea prices, paid in dollars, were falling, he added.

“First quarter [production] volumes will be higher than last season” said Mr Bowler. “This is because our investments at the Billingham plant have come on stream, resulting in higher production.

However, he added that, despite lower prices in the short term, costs could rise after Christmas as forward winter gas prices were twice today’s values.

Independent agronomist Paul Sweeney urged farmers not to delay. “Get it bought, and don’t look a gift horse in the teeth,” he said.

Mr Sweeney said he was currently researching quality stack sheets to recommend to AtlasFram members in the southwest with insufficient storage space, so that they could store fertiliser outdoors.

NFU inputs adviser Hannah Moule welcomed news of lower new-season prices but said some growers remained wary of buying early in the season after paying much higher prices for fertiliser last year.

NFU Scotland president Jim McLaren said GrowHow’s 2009 pricing schedule would bring “huge relief” to farmers. “In the many discussions we have been having with GrowHow over the past year we have been calling for the 2009 price to be at the 2007 level or below. For GrowHow to announce a starting price of £175-£178/t for July is to be welcomed.

“Also to be welcomed is the flatter pricing schedule for monthly increases of £2/t for the next three months. This reflects well against previous years where the increase has been £5/month.”

Mr McLaren added that the strict payment terms imposed by fertiliser companies at the same time as unprecedented increase in prices last year had damaged the relationship between farmers and fertiliser manufacturers.

COMMENT: Roger Chesher 

“Most were confident of seeing sub-£200 prices and by the end of last week I was expecting to £185 but £175 came as a surprise. It looks like UK AN is the cheapest in Europe, but a direct comparison with Urea (46%N), without the efficiency considerations often applied, has probably driven the price down.

“There is still some volatility in the fertiliser market, but in no way as great as last season. Ammonium sulphate prices remain high, so NS grades have a £17 premium over AN. This is a higher differential than usual which will probably flatten out as the season progresses. Potash prices remain stable at £520/t and indications are that mining will be curtailed if necessary to maintain prices. This is reflected in the price of full analysis after cut NK at £280/t.

“Phosphate costs are falling, allowing grazing compounds such as 25.5.5 to drop a little to £245/t.

“It is not all good news however, undoubtedly there are blenders and some merchants in the marketplace with inventories purchased at higher prices. This will hit their end of season profitability quite significantly.”

  • Roger Chesher is an independent fertiliser industry consultant

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