The fertilizer market may be declining, but it faces a major logistical challenge. Stocks in the trade are minimal and farmers are still waiting to buy, hoping for even lower prices. That brings problems. KAS has now fallen to € 50 per 100 kilos.
In a declining market, virtually no one buys, which is now the case in the fertilizer market and a logical strategy for the farmer. It is positive that prices are falling, but it does bring another problem. Suppliers face a logistical challenge and delivery times may become long in the coming period. In addition, the price of fertilizer may also increase again.
price rally
In recent months, the costs of producing fertilizer have been at their highest, which means that fertilizer has also been offered at a relatively expensive price. The price even rose to more than €80 per 100 kilos for KAS in the autumn. With the expectation that the gas price would remain high during the winter or could increase further, buyers cautiously purchased a certain volume. However, the opposite turned out to be true and the gas price fell against all predictions, with the result that fertilizer also became cheaper. The farmer didn't buy anything and took a wait-and-see attitude. The result: buyers were left with expensive fertilizers and made a loss on their purchased volume. Particularly from November 2022, the price for nitrogen fertilizers fell sharply.
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Fertilizer buyers and intermediaries run a lot of risk by purchasing large volumes in a market that is anything but stable. That is why they now only purchase a very limited stock. This minimizes the risk that they will be left with overpriced purchased fertilizers. While the peak demand for fertilizers will be greater than ever this year, because farmers have still purchased little. Demand normally increases from February and peaks in spring. Due to very small stocks, there is only a limited amount of fertilizer available to sell. This may result in much longer delivery times.
Application moment
The chance of applying fertilizer properly decreases as time goes on. It may happen that conditions early in the spring are excellent for applying fertilizer and later less so, for example due to weather conditions. If you have waited a long time for your fertilizer delivery and you have to apply it under poorer conditions, it will cost you your yield and therefore also money.
Fertilizers may increase again
Not only will it pose a problem for logistics, the high demand could also have an upward effect on prices, because demand is many times greater than there are stocks. The increase will not amount to tens of euros per 100 kilos, but if there is a shortage of something, things can go fast. We noticed this last season in the spring months on the fertilizer market.
It is now mid-February and spring is not far away. Normally the demand for fertilizer also starts to increase from February and that is also the case now, suppliers notice. Things are not going well yet, but demand and interest are increasing. They try to anticipate this as best as possible when purchasing fertilizers, which is difficult with the fluctuating prices. Moreover, the delivery of fertilizers is currently 50% behind what is normal for growers.
Current KAS price
Due to the purchase of fertilizers at high prices last autumn, the fertilizer market was at a standstill. The gas price was falling rapidly, but this was not yet reflected in fertilizer prices. It was only in November that KAS fell sharply and KAS, delivered in big bags of 600 kilos, is now quoted at €52,80 per 100 kilos. Last week that was €54,80 per 100 kilos. CASH in bulk is €50,80 per 100 kilos according to the weekly prices of Farmers4All.
The prices for potassium- and phosphate-containing fertilizers remain the same and are €85,30 and €100,80 per 100 kilos respectively. Potassium and phosphate fertilizers have hardly declined so far. The supply, which is slowly increasing, should put pressure on prices, but because the production of potash fertilizers requires much less gas compared to nitrogen fertilizers, they have hardly fallen so far.
The fertilizer market has also partly faltered in recent weeks. This is because very little was purchased by the farmer and the purchased stocks each time became slightly less valuable during trade. After all, quite a bit of fertilizer has been produced at high costs and this has to be paid for. This seems to make the profit achieved last year by paying lower prices for fertilizer producers next year.