As urea prices continue to rise, only a modest amount of domestic ammonium nitrate remains unsold at £388/t delivered for December. Farmers thoughts are now focussed on harvest, but some have found sufficient time for a lively response to the news of record profits in the fertiliser industry.

Excellent profits not the whole story
Terra, the Potash Corporation, Russian manufacturers and Yara have all provided excellent profit levels. GrowHow is doubtless similar, but their profits are currently bound in with their owners, Yara and Terra.
 
With higher fertiliser costs perceived as a burden by farmers it is quite understandable that some will view higher profitability as being achieved on the back of farming, and in some way unacceptable.
 
The acceptability of profit will depend on your political view point, but the way in which our fertiliser industry is now bound irrevocably into free international trade is a fact.
 
Two huge influences are at work: the first is the cost of natural gas, which is the biggest driver in raw material costs and underpins the current, high, base price of fertiliser; the second is the market economy of supply and demand and currently, this provides the profit. But, this is the same across the global market, not the result of some imagined local monopoly.
 
The only way out of this is unpalatable political interference, such as in China.
 
Nitrogen prices to fall by 2012
We all tend to forget the cyclical nature of the fertiliser industry. In the 80’s and 90’s low prices were forcing manufacturers out of business right across Europe.
 
Inevitably the pendulum has swung and perhaps we should only complain about a return to profitability if it is wasted. Fortunately, large sums are being invested in new plant worldwide and the forecast for nitrogen prices in 2011-12 is downwards.
 
Unfortunately, the cost of building factories has doubled, to say, $1.4bn for a new urea plant, and manufacturers need to be confident about future pricing to commit such sums. Importantly, however, such commitment is happening.
 
In the short-term, perhaps we are detecting the first waft of a wind of change with a downward trend in oil pricing. But gas prices have not yet followed. Forward prices still put gas over £1/therm for January. Nitrogen will not start to become cheaper just yet.

Great Britain

Ireland (All prices volatile)

†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