Fertilizer is very expensive and is expected to remain so for some time to come. Buyers seem to have become accustomed to this, because according to insiders, the relatively high price has no major influence on demand. Getting fertilizer to the customer on time, that is the challenge that the suppliers now face.
Despite the relatively high fertilizer prices, growers made normal or even more use of pre-sale options last fall, according to various suppliers. That doesn't seem like a bad choice either. Prices have remained fairly stable for a number of weeks and the market shows little sign that prices will fall in the short term. If the market follows 'the normal pattern', the price could rise a little further towards the start of the season.
It is of course still very early in the fertilizer season, but most traders do not foresee any problems with delivery before the start of the spreading season. Manufacturers occasionally shift delivery dates, but that is not unusual and does not necessarily lead to problems. Availability of transport may still pose challenges, partly depending on the course of the coronavirus. Logistics have been significantly disrupted recently. This has consequences for the availability of ships and trucks, among other things. "If many farmers keep the fertilizer on demand, this could sometimes become a problem for logistics," says a supplier.
Price increases are leveling off
Natural gas is by far the most important raw material in the production of nitrogen fertilizers. In December, the natural gas listing on the TTF set a record price of €180 per MWh hour. The natural gas market has now calmed down a bit and the price has fallen well below €100 per MWh, a level comparable to October and November. Prices are therefore still approximately three times higher than in the same period last year. The price for KAS 27% normally follows the gas price and that is also the case now. The price for KAS 27% is more than €63,30 per 100 kilos. Last year, this amounted to more than €21,40 per 100 kilos in the first weeks of the year. It should be noted that the art price was also relatively cheap at the time and was a few euros below the five-year average.
The price for Kali 60% has been on the rise in recent weeks. At the beginning of December, the Kali 60% stood at €53,60 per 100 kilos. That has risen this month to €55,10 per 100 kilos. The cause of this lies in the pressure that sanctions from the EU are putting on the regime in Belarus. That country accounts for approximately 20% of global potash production and is the EU's main supplier. Although potash has been excluded from sanctions due to its importance to the EU, Yara reported earlier this week that the import becomes increasingly difficult is becoming. Phosphate-containing fertilizers have also risen in price in recent weeks. There it is the high international demand that drives up prices. Due to the strict phosphate standards and the good availability of organic fertilizer, its effect on the Dutch market is limited, according to insiders.