Archive Article: 2002/09/06

6 September 2002

By Roger Chesher

Nitrogen prices have reached a crossroads with the future path not really decided until figures for voluntary set-aside become known.

The upward five- or six-year cycle has taken an early dip after only two seasons and the majors are once more experiencing prices below £100/t.

"Unsustainable," say the manufacturers, pointing to the fact that Russian ammonium nitrate cannot be profitably brought onto farm much below £100/t and that supplies of Lithuanian at £92-94/t are limited.

These figures, together with rising gas and fuel prices, should raise domestic AN to £100/t after harvest and £110/t or more in January.

There are already signs that a firm lead is beginning, just, to harden the price of nitrogen towards the threshold figure of £100/t.

Increased pricing will only stick, however, if the balance of supply and demand lies in favour of the supplier. If the market size continues around 2-2.1m tonnes of nitrogen, then a steady price rise should be inevitable. This would require set-aside to stay around 12% or 550,000ha. An increase to last years 800,000 ha would mean a loss of nearly 500,000t of nitrogen sales which might, just, be enough to keep nitrogen prices hovering around £100/t.

With Russian pricing only at current levels because of the imposition of anti-dumping levies, it seems inevitable that representation will soon be made for these to be reduced. After all, say the importers, if the domestic price is below £100 with little or no current competition, where is the logic in keeping imported prices artificially high?

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