The fertilizer market continues to fall in price and the price level of 2 years ago is now not far away. At the moment, it is not the natural gas price that is pushing the fertilizer market down, but the still ample stocks, cheaper ammonia and competition from other nitrogen fertilizers.
For a long time, the natural gas price led the fertilizer market, but that has now changed. Natural gas - required as a raw material for nitrogen-containing fertilizer and needed in its production - has now fallen sharply in price, but has now remained stable for some time. This has caused a sharp decline in the fertilizer market for a long time, with or without a slight delay because manufacturers continued to maintain high sales prices. The prices of nitrogen fertilizer are still falling every week compared to the price of natural gas, which is partly due to cheap ammonia, which is currently in excess in the world.
Farmer continues to wait for lowest price
Artificial fertilizer continues to drop in price every week, causing farmers to postpone purchasing the necessary fertilizers. They only buy when the moment of application has arrived and then only the maximum amount they think they need, the suppliers notice. Buying everything in advance for the rest of the season seems to be a thing of the past. This is clearly reflected in the lower sales and also in the large volumes, they report. The current weather is also not good. There is hardly any spring work due to recent rainfall, which means that the time of application has been postponed again.
It is no different for fertilizer suppliers than for farmers. Their inventories are much smaller and clearer than before and with the continued price drops they also want to run as little risk as possible. Even now that prices are approaching the level of two seasons ago, this does not mean that the bottom has already been reached. A further price drop continues due to competition from other fertilizers and cheaper ammonia.
Ammonia competitively priced
Ammonia forms the basis for the production of nitrogen fertilizers and is made from natural gas. Ammonia is currently in oversupply worldwide due to limited demand, which is causing the prices of the basic material for nitrogen fertilizer to fall. Some European fertilizer manufacturers import the cheaper product, as producing ammonia themselves is less advantageous for them, even with current gas prices.
This, in combination with the still cautious demand from farmers throughout Europe, puts pressure on prices. Fertilizer manufacturers continue to lower prices to sell products and competition with urea also counts. Urea is competitively priced in Europe, but also elsewhere in the world, and that is why other fertilizers such as KAS also have to drop in price to maintain competitiveness. Fertilizer manufacturers would rather sell something at lower prices than nothing at all. Only when the demand for fertilizer in Europe increases significantly can the price direction reverse, reports the German agricultural news platform AgrarHeute. This could happen when all spring work starts and farmers need fertilizer. However, the question remains whether that is enough, given the still ample supply on the market.
KAS shoots below €35 per 100 kilos
The price drops of KAS are also clearly visible in the weekly fertilizer prices of Farmers4All. KAS has fallen to €36,80 per 100 kilos, delivered in big bags of 600 kilos. Loose bulk is even €34,70 per 100 kilos. This means that the price is far beyond the €40 limit that many farmers had in mind a few months ago. Potassium also drops slightly to €77,80 per 100 kilos.