Archive Article: 1997/09/06
NITROGEN orders by farmers are estimated to be around 20% down on last year. Because growers are holding off selling their grain, there is not the ready cash available to spend on fertiliser.
It is not just this sector that is suffering from the loss of confidence among farmers. Agricultural retailers have seen a large drop in purchases at country stores, for example.
Another factor behind the slow fertiliser trade is that growers have seen prices weaken and there is therefore little incentive for them to stock up, despite most UK products being sold on more generous payment terms than usual.
And there are still memories for those who bought early last season paying much higher prices than their neighbours who hung on until later.
UK manufacturers of nitrogen are widely expected to attempt price rises in September, but with slow demand and a large volume of imported product due to arrive through the month, most of the trade sees little prospect of these price rises sticking.
The outlook is therefore a quiet one, with most traders expecting little to happen in either price or volume terms until mid October at the earliest.
EU Commission
It is at this point that the EU Commission may take further anti-dumping action, having already agreed with a complaint by fertiliser manufacturers in member states that cheap imports are damaging their businesses.
The likely extent of that action is unclear. The last time the EU moved in this field, market conditions were completely different, and its minimum import price was set at such a low level that it ultimately had little impact.
Imported ammonium nitrate was going onto farm at the end of August in a range from £80/t delivered up to as high as £90/t in some cases, but with the bulk of the trade in between these two figures.
This compares with the £96 to £100/t delivered price for UK manufactured ammonium nitrate, which is being offered for September delivery with December payment.
Along with imported ammonium nitrate came all the usual warnings about source and usability guarantees. Some product due to be arriving in the UK shortly is thought to have been stored on a quay side in the open, and could present problems. So check on the origin and storage conditions before making a commitment, say traders.
Prilled urea is trading from £95 to £105/t delivered to farm, which on a unit basis against ammonium nitrate is very competitively priced.
Granular material
Much of the granular material on offer is of Irish or German origin and is of good quality, costing £115 to £118/t delivered to farm. There are some very long holders of urea given the current market conditions, so prices could come under further pressure.
Over the past five years UK manufacturers have made a wholesale move away from farm and merchant storage of fertiliser pre-season in a bid to cut handling and costs. This has once again brought warnings from the trade that if demand were to suddenly start up, there may be difficulty in getting hold of product, in which case prices could firm very quickly.
The P K market is little better than that for nitrogen, with demand slow. Some cash-strapped growers are even thought to be planning to skip applications this season and rely on reserves, even if they are not up to scratch.
Benchmark 0.24.24 is being delivered at £110 to £116/t to farm for September with a November payment date. There is pressure to increase prices as US dollar-based triple superphosphate prices have recently risen.
For the time being, however, little product is moving and blenders have no problem supplying whatever is needed at short notice. 0.26.26 usually provides better value on a unit basis but is still little used – late August saw prices for this product at £6 to £7/t above 0.24.24.