Earlier and higher start to fertiliser season

The domestic fertiliser season has started somewhat earlier than usual, at prices higher than many expected just a month ago, writes Farmers Weekly commentator, Roger Chesher.

GrowHow this week priced Nitram 34.5% ammonium nitrate at £315/t delivered for June and £319/t for July (add £5 for sulphur). Only a month ago we were forecasting a new season price of £265/t. Events have moved quickly, but that £315/t and an early start should not come as a total surprise.

Last week, Yara kicked off the European nitrogen season with a price for 33.5% AN at €315/t bulk wholesale, a price which equates to £322/t on UK farms. Their first tranche at this price sold out rapidly, reflecting the high demand for fertiliser throughout the world and the rocketing price of urea, now up $110/t in three weeks.

Stuart Allison, who heads the fertiliser division of Frontier, expects a similarly rapid uptake of his first allocation of new season UK nitrogen from Yara. “With current concerns over drought there is some price resistance in farmer’s minds, but at around £320/t, the ratio of nitrogen to wheat price for next season has not changed and farmers are already placing orders,” he said.

Ken Bowler, marketing manager for GrowHow, admitted to being surprised at the strength of the global market and its rapid impact on European prices. “But, even with urea some $200/t more than last year, we have been able to pitch prices slightly under those of mainland Europe,” he said.

Sometimes it is easy to forget just how globalised our fertiliser industry has become; but it is now so transparent, interrelated and mobile that markets across the world can, and do, rapidly affect our own.

So, what exactly is going on in the supply/demand equation to create such an effect?

• The demand position has changed. Up 10% on 2010, and up 25% on the five-year average, underpinned by high global cereal prices. Higher returns result in higher applications of fertiliser over larger areas
• Pakistan, US and European markets have pulled forward three to six months. Brazil, India and south-east Asia are in the market
• 6m tonnes urea (or equivalent) increase in global use for 2011-12
• The supply position has weakened. Anticipated new factories in Qatar and Algeria are one year late
• Plants temporarily closed in Russia, Egypt, Venezuela, Lithuania. No Libyan urea this year
• Chinese urea exports down 70% earlier this year. Chinese coal prices up (used to make urea)
• Shortages of gas in Pakistan and civil unrest in North Africa

And all of this is only a flavour of a fluctuating marketplace in which high output prices are driving demand and an 8% nitrogen supply deficit are the key factors.

As Mr Allison said of the nitrogen price: “Now the key questions are: How far will it go up? When will it peak? And, when will it go down again?” His answer was “not this side of Christmas”.

May2011 (£/t delivered)*

UK 34.5% N


Imported urea

Imported AN

£315 (June) £319 (July)

Around £305


£295 (Polish) £315 (Lithuanian)

Complex 25.5.5


Phosphate (TSP)

Potash (Muriate)





*All illustrated prices are based upon 24-tonne loads for cash payment month following. Prices for smaller loads and 50kg bags will vary considerably.

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