Fertiliser shake-up ends – for manufacturers

By Roger Chesher

THE farmer who, on his way home from the Cereals Event, found he had to pay 85.9ppl for petrol, grumbled but succumbed to the inevitable and paid up.

Reflecting that it was only 60-odd pence last year doesnt change the current situation.

Brent crude oil then was $13.4/bl; now its $30/bl. Ammonia then was $90/t, now its $200/t. It is inevitable that fertiliser nitrogen prices are rising.

Hydro has announced the closure of three NPK plants in France, which continues to tighten the screw on upward pricing.

Having been unable to follow their original plan to close compound production in addition to the nitrate plant closure at Montoir, this new announcement brings them back in line with their earlier stated objectives.

Kemira is still shut down at Ince near Chester. The planned maintenance has taken slightly longer than originally thought.

Generally, supply and balance are now more in line than they have been for years.

It was no surprise therefore to find all the fertiliser companies at Cereals 2000 united in their determination to get structure into next seasons marketplace.

We wont know all the details until publication in two weeks time, but much of it is clear.

Fertiliser will be sold on a cash basis.

A price structure will be based on a published spring price (estimated at between 125 and 130) and a discounted early-season price (perhaps 110).

Manufacturers will be considerably tighter in their relationships with merchant customers, removing fixed margins and rebates.

Most fertiliser will be on a cost-delivered basis, with manufacturers in many cases delivering direct from factory to farm.

The fertiliser industry and farming have shaken down. Merchanting still, say many, has some way to go.

But everything points to the fertiliser industry, at last, getting at least one foot out of the mire on to firmer ground.

Not surprisingly, in this environment, prices have hardly changed this week.

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