August fertiliser bills put pressure on farm cash flows

Market Commentary by independent consultant Roger Chesher (3 September 2008)

 

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As is usual during harvest , new orders for fertiliser at merchant level are few and far between. A late harvest is also providing a challenge to get existing orders delivered, and some farmers are finding it difficult to pay the August fertiliser bill as cash flow is compromised for the same reason.


There has been speculation over the anticipated end of the Chinese internal tax on urea exports. This, it was hoped, would end in September but today there are fears that the tax will be increased to 185%, making it even less likely that Chinese urea will soon enter the global market again.


There are fears that 2.5-2.9 million tonnes could be in warehouses, stockpiled for export should restrictions be relaxed. Taking such a quantity off the market will not have had the desired effect of pushing the internal price down, stimulating home sales and reducing food prices for the Chinese people. Therefore the period of tax is extended and the level increased.


The conflict in Georgia has halted its fertiliser exports, but there is still plenty of AN available from Russia, Bulgaria, Lithuania and Poland from £365-385/t for October.


Conversely, domestic AN is sold out until January when it is priced around £410/t., whereas Urea is plentiful around £500. A September top-up of liquid UAN will cost £1.15/ kilo N, roughly equivalent to £400/t for 34.5%AN.


October prices for compound fertiliser (NPK/S) have now been published and reflect the horrendous price level of phosphorus (P) and Potassium (K). Triplesuperphosphate is now £700/t and surrounded by fears that currency exchange rates may push it as high as £760. Muriate of potash stands at £600 to £630/t and many arable farmers are starting to join their grassland cousins in exhibiting price resistance to these nutrients.


Attention to agronomy detail is now seen as paramount, and not before time according to fertiliser agronomists who have sometimes felt themselves the Cinderellas opf their profession in the past. For example, on an 11t/ha crop of wheat, removal of 60% of the straw denies the following crop of £70/ha value of P and K.


Although harvest is late, especially north of the border, yields are good and general opinion states that nitrogen, despite modern prices, still pays.


A further strong market is anticipated therefore, but perhaps not with the usual pre-Christmas rush.

 

GREAT BRITAIN

 




















Straight


Domestic N
(34.5%N) SP5


Imported AN 
eg Lithuanian


Imported urea


Liquid UAN
37kg N/100litre


 (28.8 %N/t)


 


 


£410-413


January


Increasing volumes            now tracking domestic price


£500


£1.15/kg


 


 


 


 

 












TSP (47%P2O5)


£700+ tight availability


 


Muriate of Potash (60%K2O)


£600-630


 


 












































































Compound


N.P.K


Complex


Blended


 


 


 


25.5.5


£414


Oct


Broadly similar


 


 


 


15.15.20


£ not available


 14.14.20


£590


 


 


 


20.10.10 / 27.5.5


£435 if offered


Broadly similar


 


 


 


17.17.17


Outpriced


None in production


16.16.16


£560-600


 


 


 


Aftercuts (NK) (with sulphur)


 


£419 Aug


 


 


 


23.4.13.7 Sulphur


 £426


 


 


 


 


 


 


 


 


 


 


Autumn grades (PK)


 


£560+ when offered.


 


 


 


 


 


 


 


 


 


 







Trace elements


Copper, zinc, selenium,
cobalt Iodine and sodium

£11.80/acre pack


 







IRELAND (All prices volatile)


























 


Urea


CAN


25.0.13
aftercut*


27.0.6


27.6.6
complex**


Northern
Ireland


No market


Highly volatile spot prices


Highly volatile spot prices


Highly volatile spot prices


No longer used


Phosphate regulations


Republic
of Ireland


 


Highly volatile spot prices


Highly volatile spot prices


 


No Market.





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


 


 






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