Last-minute buyers face higher prices

18 January 2002

Last-minute buyers face higher prices

FARMERS who have yet to buy fertiliser this spring face price rises of £2/t or more each month until the end of the season in June, reports Roger Chesher of the Bridgewater Partnership.

That is because too many have left buying until the last minute, and the balance between supply and demand is now tipping in suppliers favour.

Some 40% of the arable market and most of the grassland tonnage is still to be delivered.

That is more than 1m tonnes for nitrogen alone, though opinions differ as to how much is not yet ordered. But with autumn plantings up 30% on last year there is little doubt that business will be brisk.

Fertiliser prices have been low in recent years because of chronic over-supply in Western Europe. But last season saw a massive supply cut as factories closed.

The result was a large hike in European prices, fortunately not mirrored this season. But the fact that they are still higher than in the late 1990s and that there are rewards for early purchase has still to strike home in some areas.

The UK industry no longer has capacity to supply all local demand, but shortfalls are adequately met by imports. The supply position is probably neutral overall in its impact on pricing. But new flexibility in ability to export ammonia means the two remaining UK ammonia makers, Terra and Kemira, are much more able to control stocks, which are reportedly lower than in previous years.

British gas prices are high, placing pressure on manufacturers to raise prices although this is partly neutralised by low world ammonia prices.

Low early demand has dissuaded some importers from bringing in large tonnages.

Enough granular urea is probably already here to supply demand at £120-£122/t on farm. But world demand is likely to keep the prilled urea price up. &#42

Fertiliser special continues on p62

Factor Situation Price impact


Gas prices Currently high in the UK, although

fallen back in the USA. Major input

for ammonia manufacture.

Ammonia prices Low on World markets, limits ability

of makers to export to other markets.

Manufacturing capacity Now more balanced with a neutral

pricing effect.

Current stocks Better controlled, lower than

previous year.

Manufacturing With Hydro now importing to meet

flexibility demand, and Terra /Kemira able to

export ammonia, excess stocks can

be avoided.

Imports Not quite enough around to affect

spring price.

Currency Too early for Euro to have any

unifying effect.

$ price currently neutral in effect

on buying phosphate and potash.


Crop requirements Autumn plantings 30% up on last year.

Dairy sector more buoyant.

Demand high.

Farm stocks Carry over from last season

reported low.

Purchase patterns Strong move towards purchase at

point of usage. Last-minute logistical

problems predicted.

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