Mixed outlook for fertiliser with farmers reliant on imports

Fertiliser prices have eased back slightly so far in 2024, and have almost halved from where they were this time last year.

Although markets have softened and appear slightly less volatile, the UK has become increasingly reliant on imported ammonia, which leaves prices at the mercy of larger global market drivers.

Sarah Baker, AHDB head of economics and analysis, said: “While some input costs are falling, they remain above pre-inflation levels and are likely to stay risky due to linkage to energy markets and instability around the world.”

See also: Short-term uplift forecast for fertiliser prices by traders

The UK is a fairly small importer of fertiliser compared with other nations and, therefore, may have to pay higher premiums to secure products and compete at a global level, according to the AHDB.

Tightening supplies

The market in Europe for ammonium nitrate has started to look tighter in recent weeks.

Traders at Frontier said: “With one large European urea manufacturer considering restarting production in the coming months, it would indicate either that demand is now exceeding supply or manufacturers are justifying the cost of production into the European market.”

Fertiliser manufacturer Yara noted that nitrogen supply had been lower than normal in Europe and the US so far this crop year.

In 2023, Yara made 5% fewer global deliveries on the year, but deliveries in Europe were up by 3%.

More recently, the company has noticed an increase in buyer activity as fertiliser products have started to become more affordable for farm businesses.

Svein Tore Holsether, Yara chief executive, said: “As we now embark on a new year, Yara is well positioned, with a strong track record in more volatile markets.”

However, demand will also factor into pricing, and a smaller planted area throughout western Europe has the potential to reduce overall demand.

There is also an ongoing shift towards liquid fertilisers such as urea ammonium nitrate (UAN), which is gaining market share.

Traders at Cefetra said UAN markets remain stable and looks competitive against granular grades.