The year of the fertiliser buyers market


By Roger Chesher


IF EVER there was a buyers market for fertiliser, 1999 was it.


Despite a year of record low fertiliser prices in real terms, sales were not spectacular – hardly surprising considering the perilous state of farm incomes.


All fertiliser prices are strongly linked to the nitrogen price and typically there is a £10 or so differential between imported and domestic ammonium nitrate.


The fertiliser world operates on a seasonal basis, June to May, with prices highest from January to May and then dropping in the summer.


This year domestic ammonium nitrate rose to £92/t in January, fell to £90/t in May and thereafter struggled around the £87/t mark.


These are published prices although in reality some farmers have been able to purchase their domestic AN below these levels.


Volume sales were only really achieved in the spring when, despite demand, the industry survived a forecast logistical nightmare and delivered on time.


As with all commodities, supply and demand dictates market price and the fertiliser market is oversupplied by some 3M tonnes of Nitrates in Western Europe.


At the same time, farmers who store their annual fertiliser requirements on a rolling basis, tended to use their on-farm stocks rather than buying in supplies.


Suppliers inventories have therefore remained high.


The low UK price and lack of confidence in the market has resulted in a low level of imports this year.


Alarm bells ring in the industry when the price drops in the £90s and all the majors responded at the start of the year by trimming fixed costs.


Sadly this has meant job losses, some 50 so far from Kemira, 80 from Terra and an unspecified number at Hydro.


The problem of massive oversupply remains, however, and all members of the European industry have announced substantial rationalisation in 2000.


Despite all this, both Kemira and Terra have introduced new products to their range this year and Hydro and Kemira have invested significantly in Precision Farming.


The year ends with AN still around £88/t and firming.


But you need cash to pay for it as farm gate credit has also been a victim of 1999.


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