Fertiliser prices start to rise amid supply disruption

UK fertiliser prices held relatively flat over the new year, but the market now appears to be lifting as supply chain disruption starts to feed through into prices.

The fertiliser sector has once again urged growers to stock up early to avoid backlogs, however ongoing cashflow concerns mean many farm businesses are still holding back.

See also: EU suspends fertiliser tariffs and seeks to halt carbon tax

Granular urea was trading at £424/t in December, according to prices collected by the AHDB, having dropped back slightly during the autumn, but remains more than £50/t above year-earlier levels.

Meanwhile, UK-produced ammonium nitrate lifted to £406/t in December.

Industry sources suggest values have varied throughout January with some prices quoted at £385/t for February delivery, but there’s an expectation that prices will increase for March.

Several merchants have indicated that prices are now starting to rise due to bottlenecks in the supply chain.

Traders at ADM suggest current conditions may be favourable for UK buyers to secure any remaining urea for the season now rather than waiting on a potential late price drop.

UK merchants stocked up ahead of the new year to mitigate the impact of the introduction of the Carbon Border Adjustment Mechanism (Cbam) in the EU.

However, uncertainty about the implementation of the carbon tax on imports of fertiliser has since caused shipping delays and logistical challenges.

An unstable geopolitical situation between the US and several major urea exporters is also reportedly fuelling prices.

Future supply concerns

The industry warns that the UK could face similar supply issues to last spring, if there is a sudden flurry of late orders.

Michael Pater, managing director of Origin Soil Nutrition, said confusion between countries in the EU about a potential suspension of Cbam, along with adverse weather disrupting vessels crossing the Bay of Biscay from the south Mediterranean, had delayed European procurement by roughly three to four weeks.

“European markets are now waking up, certainly in Southern Europe and Eastern Europe, and we’re now finding that it is becoming more challenging in terms of procurement,” said Mr Pater.

“The majority of the UK ports can only handle smaller vessels and those later buyers in the grassland sector will be reliant on European producers, and those prices are now rising.

 “The market price has moved up; you’ve got the weather pattern as it sits today not conducive to shipping and the UK has to import the guts of 3m tonnes of fertiliser.”

He suggested that European producers of nitrates were increasing prices on the back of rising energy costs and gas prices, and that ammonia was still trading at historically high levels.

Demand and procurement from UK farmers is probably two to three weeks behind where it was last year, according to Mr Pater.

“If the weather follows a similar pattern to last year and we have a dry early spring, then the situation with the late procurement will have a big impact on what can be supplied.”

Mr Pater advised farmers to order as soon as possible and take delivery when offered in order to ensure supplies.