Jump in N price on the way as imports slump

15 January 1999

Jump in N price on the way as imports slump

By Robert Harris

NITROGEN fertiliser prices are set to jump due to a slump in imports which could also leave late buyers short of product.

The warning comes from Paul Antcliff, Cargills UK fertiliser manager, who estimates imports of ammonium nitrate and urea were about 75% and 62% below normal between June and November.

That means the shortfall now stands at about 350,000t, he says. Merchants have been unwilling to risk importing product without firm orders, with the low price for UK product, which struggled to break the £90/t barrier for months, leaving no room for a margin.

There is limited scope for extra imports in the early part of this year, he adds. "There are no indications of an rise in vessel nominations for January, and there is only about 50,000t of spare logistical capacity during February and March."

That could leave farmers short. He puts demand at 2.2m tonnes, a figure with which Terras Andy Yates agrees. "We anticipate a fall of about 10% on normal usage. The rise in set-aside and a switch to spring sowing on sodden fields in the north could each reduce usage by about 80,000t." That still leaves room for 400,000t of imports, he adds. Although Terra and other UK firms have built stocks in anticipation of such a shortage, says Mr Yates, they are unlikely to fully compensate for it. And makers will only release extra supplies on to the UK market if prices remain in line with their expectations, otherwise they will be exported, he says.

February deliveries are available for £98/t. "We wont be selling for less. I cant see the market going mad, but in the short term, it could be well over £100/t."

The 20% of arable farmers and 60% of grassland farmers still to buy should take note and obtain a price for February or March delivery now, Mr Antcliff advises. "Prices can only go up from here."

Independent broker Mike Stickland agrees, and suggests growers could face a tough task tracking down supplies. "While I do not think farmers will run out of product, they may not be able to source what they want when they want it.

"There is still 800,000t of the market to go, and only three months in which to deliver it. At some point at the end of February, a lot of people will be clamouring for fertiliser, and there wont be much chance to deliver. Manufacturers and importers will take advantage of that to push the price up." &#42

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