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Fertiliser price drops could be levelling off

Fertiliser prices have declined across the board since the turn of the year, with changes in the supply and demand balance and a fall in gas prices.

According to Josh Joachim, fertiliser procurement manager at farm buying group AF, Urea prices have led the way – recently dropping from a peak of £710 to £450/tonne. He said: “Ammonium Nitrate prices have followed suit – our April prices are up by £5 to £455/t, but the market is waiting for the new season CF Fertiliser prices, with farmers hoping they will begin with a three." Although phosphate and potash production does not rely on gas to be produced, the two nutrients also saw big increase in prices a year ago, but they have also moderated, Mr Joachim said. “The TSP [Triple Super phosphate] price peaked at £900/t but is now down to £560/t, while the Muriate of Potash price has fallen from £720/t to £570/t. While most growers need nitrogen fertiliser, many were prepared to skip phosphate and potash applications, which reduced demand and fed through to lower prices.” Mr Joachim said that the high prices of the last 18 months have altered farmer behaviour, with more farmers using a fertiliser-use calculator that AF launched, plus testing soil and checking nitrogen content in grains. More growers have also switched to slow-release methylene urea. He said: “If there is a positive to the recent high prices, then it is a focus on the value of fertiliser to the crop and the optimum way to apply and use it.” He urged growers to have a conversation with their fertiliser suppliers as to their needs for this season and next, so they can plan purchases.

The drop in gas prices since their peak last August has been dramatic. The May 2023 Dutch Natural Gas Futures price on the ICE market was at €51/MW (£45/MW) last week, compared to a peak of €310/MW (£272/MW) in August 2022. The current level is similar to that at the start of Russia’s invasion of Ukraine and three times higher than two years ago. Jo Gilbertson, head of fertiliser at the Agricultural Industries Confederation, said: “Gas prices have not come down much since February and even risen a little recently. “Whilst we welcome the reduction in the unprecedented high cost of gas, we need to remain aware that instability in the gas price disproportionately affects fertiliser production costs.” Mr Gilbertson highlighted comments from the head of Germany’s energy agency, warning of continued high gas prices and pressure on supplies. He said that the 2023/2024 winter will be the first with no Russian gas and that the global supply of liquefied natural gas is not expected to increase significantly this year or next. Meanwhile, a recovery in the Chinese economy could increase the global demand for gas, pushing up prices. Current gas prices are still not low enough for the reopening of fertiliser plants that were closed when gas prices soared. CF’s Billingham plant remains the sole UK-based manufacturer of nitrogen, supplying ammonium nitrate to the UK market. At one point, it was estimated that 70 per cent of the EU’s nitrogen plants had suspended production. However, some are coming back online, including Yara’s Ferrara plant in Italy, which has been shut down since mid-June. Some industry observers believe that consolidation of European Nitrogen fertiliser production capacity is overdue. Gas prices have ticked up over the last week, partly because of a rise in the oil price. Oil-producing countries in the Organisation of the Petroleum Exporting Countries (OPEC) group agreed to cut production by one million barrels a day, which pushed the crude oil price up from US$5 (£4) a barrel to US$85 (£68). That was still US$30/barrel (£24/barrel) less than the post-invasion peak in June 2022, but US$20/barrel (£16/barrel) less than two years ago. A global economic recovery, especially in China, could push up demand for oil, with oil and gas prices rising as a result.


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