Urea keeps lid on fertiliser prices

Harvest is under way, pastures have been parched and the trade is on holiday.

Hardly surprising, then, that the fertiliser market has slowed considerably.

However, recent rain has stimulated livestock farmers to start ordering compound fertilisers, but this business is piecemeal.

Prices for compounds have risen above last month and seem to be sticking, probably because the increased costs for nitrogen which the blenders must bear are beginning to bite.

Nitrogen sales have been very good in July with some 50-60% of arable farmers having already bought.

Given the indications for new season gas pricing in October it seems they have bought well, especially so as the expected month on month price increases since June have been only sporadically applied.

Terra, especially, is under enormous pressure to raise prices to the September level as they have been forced to manufacture using bought in ammonia following the fire at Billingham.

Their own ammonia plant is, however, expected back on line any day now.

One of the factors helping to keep early season prices of AN lower than expected has been the availability of cheap granular urea. This is £15/t cheaper than last year whereas AN costs £15/t more.

Some farmers will always choose urea, some use only ammonium nitrate, but a significant number of “floating voters” have plumped for urea this year on a price per tonnne basis.

Indeed, one major merchant’s usual annual tonnage of 150,000t was sold in June and July and the company expects to sell 100,000t more this season.

Despite concerns over possible farm thefts of ammonium nitrate for use in terrorist bombing attacks, the government does not see urea as a viable alternative for total use in the UK.

As outlined on a new website www.secureyourfertiliser.gov.uk  published this week, concerns are expressed for the release of ammonia to the atmosphere from urea, despite it being very successfully used on suitable soils.

Implicit in the website is a message to keep all forms of fertiliser safely under lock and key, the success of a voluntary initiative being essential to prevent yet more future legislation.

There is little doubt that prices generally will increase after harvest.

Compounds, NK and PK are already creeping upwards.

However, there is optimism amongst both farmer and merchant given higher output prices and reduced harvest costs and perhaps this is the year we shall see some replacement of  P and K into depleted soils.

PK “holidays” are viable from time to time but there is real concern that this one has gone on too long.

Potassium and sulphur in particular are being neglected on the macro scale and there is a tendency to forget that nitrogen is inefficient without supporting nutrients.

Although the press in general is beginning to carry optimistic stories about the security of future gas supplies it is wise to remember that these are still at least a year away and another difficult winter awaits us.

If UK gas costs escalate above fertiliser prices there is little doubt that ammonia plants will be temporarily shut down.

Our farmers will not be short of fertiliser, but it will still be costly.

And, once relief does come with new supplies in the future, whilst price fluctuation may cease, the days of AN below £100/t are gone for ever.