The price of KAS has recently fallen considerably and the farmer is now charging a price of under €70 per 100 kilograms this week. The potash and phosphate-containing fertilizers are rising to unprecedented heights. What are the reasons for this and when should you strike as a grower?
More than a year ago, a price increase of €0,50 per 100 kilograms in one week was already a considerable increase, but we are no longer surprised by that. Normally the fertilizer market would be in calmer waters at this time of the season, but nothing could be further from the truth. Potassium salt60 rose again this week by several euros and phosphate-containing fertilizers follow the same trend. The farmer seems to already have the bulk in the barn and has a wait-and-see attitude. Recently, considerably less has been purchased than normal in April, but also in May according to suppliers.
Gas price determined KAS price
The price of nitrogen-containing fertilizers has fallen sharply in recent weeks by several euros per week. That depends on various factors, but it is a fact that the price of natural gas is leading. For example, producing KAS requires an enormous amount of natural gas. And it is precisely that price that has also started to decline recently. Reasons for this are the hoarding of natural gas in the EU, the increased supply of liquefied gas (LNG) and of course the transition to a higher temperature during the summer. And while Russia is closer than ever to closing its gas pipelines. The price has now fallen below a level before the war with Ukraine broke out.
The gas quotation on the TTF clearly reflects the recent decline. Things have gone quickly, especially in recent weeks, and yesterday (May 23) even €82,30 per MWh was recorded on the TTF. It is only logical that the price of nitrogen fertilizers will gradually decrease.
When should you stock up?
Normally the fertilizer market is in a quiet phase at this time of the year and the price is declining until July and August. Production continues, just as now, at full speed, causing the price to drop due to lower demand and higher supply. However, the markets are quite confused. Prices fluctuate considerably and the ceiling and floor are unclear. KAS is far from its record price in March and has already fallen more than €30 per 100 kilograms, but where is the bottom? Given the low sales of CANAS, farmers also have to buy something for this season, otherwise it will cost revenue. Animal manure alone will not get them there.
As mentioned earlier, the gas price is leading. If the gas tap is turned off or similar sanctions are imposed against the EU, production costs for KAS will increase rapidly again. Another question is whether the farmer's purchasing behavior is changing. Some people will start shopping earlier than before. They do not want and cannot take the risk of paying the top price (again) at the start of the new growing season. One thing that seems certain is that the price levels of previous years will not be achieved in any case. If the gas price continues to fall steadily and production continues as it is now, a price of €60 per 100 kilograms is possible according to the fertilizer trade.