Big nitrogen price drop tempts growers

A big drop in ammonium nitrate (AN) prices has kicked off the new season on a positive note for growers.

CF Fertilisers UK, full owner of the former GrowHow business, came out early this week with an offering which is putting UK manufactured AN on to farm at £163-£165/t delivered in July.

This represents a £70/t drop on the price at which the market set out last season.

The pricing reflects general arable market price pressure and CF’s desire to build market share. To do this it will have to displace imports.

Terms have also been set for August (seeking a £2/t increase on July prices) and September, where a £5/t rise on July is suggested.

See also: Potato prices rise another £10/t

A significant fall was needed to convince growers to order early, following a season which ended with UK AN priced at about £30/t lower than where it started.

Growers had been quick to take up the limited volume available, said traders.

“The price is right, it has hit a sweet spot and we are seeing very good uptake this week,” said Gleadell fertiliser manager Calum Findlay.

At co-op Openfield, national fertiliser business manager Graham Colledge said the new price was the lowest since 2007.

“It’s about getting the confidence of growers to purchase something now that they don’t need until February,” he said.

The market was slightly nervous and terms may be withdrawn temporarily on Friday until things settle following the referendum result, said Mr Colledge.

Depending on origin, imported AN is £5-£15/t cheaper than UK manufactured product. Traders may have to take a loss to shift some old stock while they wait for new cargoes to come in.

The granular urea market is quiet, although there are plenty of offers for delivery from October through to December at £180-£185/t.

There are also spot opportunities but prices are very currency dependent, so fluctuate frequently.

Urea availability is expected to be good and it is estimated that about a third of autumn requirements have already been booked by growers, much of this in pools.

Potash and phosphate prices have moved little if at all over the past few weeks, with this market also very quiet. No autumn availability problems are expected.

Some blenders are discounting to move NPK material in the compound and blends markets, with a 20:10:10 compound at £235-£237/t for July delivery and blends up to £20/t lower.