Nitrogen fertilizer prices across Europe continue to fall in November. The price has now even dropped below €700 per ton for KAS, the same level as last summer. Is there even more room for KAS to drop in price?
Fertilizer producers in Europe can produce fertilizer at increasingly lower production costs due to falling gas prices. As a result, the production of fertilizers in Europe is also gaining momentum. European fertilizer production is now estimated to be running at 70% of total capacity. Prices outside Europe are also falling sharply. There appears to be a stock, some of which was produced at very high production costs. Farmers and the trade do not seem to be hit hard yet, despite the price drops. They are waiting. When prices rose last summer, they took no action. While the price of nitrogen-containing fertilizer has now fallen to an almost comparable level to the lowest point last summer.
KAS 'only' €66 per 100 kilos
It is mainly nitrogen-containing fertilizers that are dropping rapidly in price. Phosphate and potassium fertilizers also decrease, but this is minimal. This has everything to do with the availability and production of the fertilizers, where nitrogen-containing fertilizers use natural gas as a raw material and as energy for production.
Where there mid october (week 42) almost €90 per 100 kilos was paid for KAS fertilizer, this has now become €66,80 per 100 kilos in week 47, according to the weekly prices of Farmers4All. These are the prices for big bags of 600 kilos. Anyone who wants to deposit KAS loose even pays €64,70 per 100 kilos. The price of the phosphate fertilizer Tripel Super 45% has remained the same for weeks and potassium salt 60 has fallen slightly to €86,80 per 100 kilos.
Fertilizer prices also fell sharply in other European countries. For example, last week a comparable price of €66 per 100 kilos was paid for KAS in Germany, more than €100 cheaper than at the end of October. Compared to the Netherlands, the prices of potash and phosphate fertilizers are also falling faster, but these prices remain high. In France, nitrogen fertilizer ammonium nitrate can be collected for €63 per 100 kilos from the French port of Rouen, it was noted on November 18. Less is also paid for phosphate fertilizer: €80 per 100 kilos for the phosphate fertilizer Triple Super 46%. Also in other parts of the world such as the United States, 'only' $500 per tonne is being paid for urea instead of the $800 earlier this year.
Besides the fact that the gas price has a major influence on production and supply on the market, there are other reasons that push prices down. That has to do with demand, which is very low at the moment. Both the trade and the farmers do not (yet) feel compelled to do business. All costs have already risen enormously in the past year and it will still be some time before fertilizer has to be used. In the meantime, fertilizer stocks are increasing, which is putting further pressure on prices.
Russian exports to India
What has also had an influence is the Russian export of fertilizers to India. Fertilizer imports from Russia to India rose 1% from April 371 this year to 2,15 million tonnes, Reuters news agency reported. India struggled to purchase expensive fertilizers on the global market and managed to purchase fertilizer at discounts through Russia. After all, Russia had high stocks, which the country normally exported to Europe. This left other countries, including China - which normally exports a lot of fertilizer to India - with higher stocks. This put pressure on fertilizer prices on the world market.
Stock up now or risk it?
Waiting now seems to be paying off now that fertilizer prices are falling. On the other hand, as fast as the decline starts, the price could also shoot up again. An ample stock and production that is starting again sounds very positive, but if the gas price is unstable and higher, production will be restricted again and the stock will no longer increase. Risk spreading, stocking up on one section now and the rest at another time, is often heard in the corridors. It is already noticeable that when reports of a cold period occur, the gas price on the Dutch TTF Gas Futures shoots up. In addition, the question is how far the gas price can drop in the winter. So far it has been warmer than average in Europe and winter has yet to officially start.