The usually tranquil run-up to the start of a new fertiliser season is distinctly ruffled this year with early trading in urea resulting in knock-on effects on imported AN prices, writes our commentator Roger Chesher
The UK sole nitrogen manufacturer, GrowHow UK, has remained unaffected by this activity and not surprisingly is finding price resistance in the spot market as its current prices seem high.
This is to a certain extent purely academic as GrowHow has, presumably, achieved its ambitions and prepares for the new season ahead which undoubtedly will start early, probably at the end of May.
The current nitrogen market, buoyed by reports of low soil nitrogen levels, is thus left to the importers of urea and AN, and the compound market left to Yara and the blenders.
Globally, March/April urea prices came right back to $320/t FOB. and then moved up again to $335.
International estimates suggest a new-season floor price of $320/t FOB, rising to $380/t in six months’ time.
Selling on this falling market, traders such as Gleadell, Nidera and Thomas Bell & Sons have been reportedly able to offer urea at £275 to £300/t on farm for delivery June onwards, with some also able to offer merchant’s deferred payment terms. This has proved attractive to urea buyers wishing to enter the market early.With Lithuanian ammonium nitrate now competing at £290/t it is not surprising that domestic pricing looks expensive at £330/t. This flurry of activity and de-stocking around imported AN could result in a modest shift downwards in blended compound prices, to the relief of the grassland farmer, and prices for after-cut products (NK and NKS) are also expected “any day now”. Hopefully, these too may be a little less costly than anticipated. For the mainstream early buyer this is all potentially good news. An earlier start to the season brings the opportunity to purchase the last of the “top up” tonnage at cheaper prices, and a floor price of $320/t FOB for urea means a starting price for domestic AN around the £265/t mark.
Not cheap, but arguably cheaper than expected.