October fertiliser prices jump by £30/t
Farmers face a massive hike in fertiliser bills this autumn after GrowHow and Yara announced significantly higher prices for October.
Retail prices for ammonium nitrate have increased from about £220/t in September to £250/t for October, while urea – reported to be in very short supply – has been priced at nearer £285/t delivered.
Both companies blamed the increase on the rally in grain prices during August, which had boosted next season’s expected plantings and therefore demand for fertiliser. This had combined with generally tight global fertiliser supplies.
“Normally farmers aren’t that interested in buying fertiliser during August, but the increase in grain prices has prompted a lot of demand,” said Yara UK managing director Tove Andersen. “The situation looks very tight until at least the end of the year.”
GrowHow’s Ken Bowler agreed. “Demand is still very brisk and supplies quite tight – stock levels were 1m tonnes down on the year before at the start of the season and demand has been rising on the back of grain pricing.
“Forecasters for urea suggest strong prices until at least the first quarter of 2011 and we could see urea up to £300/t by Christmas, although there is quite a spectrum of prices out there. While we won’t necessarily see more big jumps in nitrogen markets, the sentiment on global prices is fairly bullish,” he added.
But many farmers, especially those in the arable sector, have already bought some or all of their fertiliser requirements, leaving those who chose to wait or were unable to buy early facing the heftiest bills. Yara estimated that around 60-70% of the total nitrogen market had been committed, while Mr Bowler suggested it was nearer 50-60%.
A few manufacturing problems in parts of Europe over the summer had added to the upward pressure on fertiliser prices, although he said production at GrowHow’s two plants at Ince in Cheshire and Billingham on Teesside was running “flat out”.
Fertiliser outlook
Fertiliser demand was predicted to grow at a sustained rate over the next four years, the International Fertiliser Industry Association predicted earlier this summer (FW, 9 July).
But production capacity was also likely to increase between 2010 and 2014 and in the long-term, there could be a potential supply surplus for nitrogen and potassium fertilisers, it said.
In the nitrogen sector, much of the increase in ammonia capacity was associated with new urea capacity, which was forecast to grow by 51.3mt, or 30% over 2009, to 222mt by 2014. It forecast a large potential urea surplus, accelerating after 2012, if all the proposed projects were realised on time. The global nitrogen supply/demand balance would show a potential surplus of almost 4.7mt in 2010, increasing to 16.7mt in 2014, the IFA suggested.
