Nitrogen price high – and could be higher

By Roger Chesher

SPECULATION concerning spring nitrogen prices in Britain seems to be over.

The strong demand for ammonia and urea in America following the shutdown of production has led to high prices worldwide.

With such a large market to supply at these values, in large, easy cargoes, there is little incentive for exporters to supply the UK with low price fertiliser.

New cargoes are still about 112/t CIF (carriage, insurance and freight) bagged to UK ports.

Even with delivery direct to farm from ship, off-loading, transport and margin will put this material on-farm at 127/t.

These values have given rise to speculation that domestic producers might raise prices even higher, but so far that seems unlikely unless gas or transport costs rise again in the UK.

There is, however, no reason whatsoever to suppose that prices will come down.

If UK producers find themselves in a declining market, they too will export ammonia to more buoyant ones.

UK manufacturers are now operating at February prices but little is as yet going onto farm.

Much of the merchants stock and existing imports currently in-store are sold but not yet moved, and will go on to farm around 120/t.

The big unknown is exactly how much of the market has yet to be supplied. Consumption and therefore sales volumes will be down.

Failed plantings in the autumn could lead to a shortfall requirement of 200,000 tonnes of nitrogen this spring, but increased demand for compound fertilisers for spring plantings could cut this by half.

With the market still quiet, an extremely busy spot market in February and March is anticipated.

CURRENT PRICES

IRELAND