The end of the price drops seems imminent on the fertilizer market. Prices are stabilizing both on the world market and in Europe. Supply and demand have been closer recently due to spring. In Europe, the gas price continues to fall, which can restart our own production for the coming season.
Prices for nitrogen fertilizer have fallen up to and including the spring work and are now only a few euros above the market price of spring 2021. As expected, demand has increased considerably in recent weeks because farmers have waited to purchase until the moment of application. In addition, additional wheat was purchased because the weather conditions hardly allowed the spreading of animal manure this season. Despite this, the volume of fertilizer sold does not come close to that of other years. Dairy farmers seem to buy separately for the cuts.
KAS dips below 30 euros
Nitrogen fertilizer prices fell again last week (week 18). €31,80 was paid per 100 kilos for calcium ammonium nitrate (KAS), delivered in big bags of 600 kilos. CASH in loose form even starts with a different number as the first digit and now stands at €29,70 per 100 kilos. This week the prices remain the same. Potassium60 and triple superphosphate remained the same in price.
New price equilibrium
Even as demand increased in recent weeks, the price of nitrogen fertilizer continued to slowly decline from time to time. It shows that supply is still greater than demand, but now they seem to be a lot closer together. In addition, fertilizer manufacturers are also focusing again on production for the next year from these summer months. A new price equilibrium must be found.
Another factor that counts is some competition with urea. The price of urea continued to fall sharply, making it a good alternative to other nitrogen fertilizers such as KAS for some European farmers. In France, a lot of urea is usually used. To prevent farmers from switching, fertilizer manufacturers pushed the price further down to maintain market share. A further price drop is not necessary and this is reflected in the quotations, which appear to remain reasonably stable.
Own production attractive again
In Europe, fertilizer manufacturers are still far from operating at 100% and it is questionable whether that will still happen. Recently, a lot of ammonia – the basis for the production of nitrogen fertilizers – has been imported instead of being produced by European fertilizer factories. Ammonia is still in oversupply worldwide due to limited demand, which makes the basic raw material cheaper to import than to produce it yourself at current gas prices. Even now that demand for the product has increased, ammonia continues to decline in price on the world market.
However, current natural gas prices are still declining. In fact, the natural gas price has risen on the Dutch TTF since mid-April €45,40 up to the time of writing today (May 9), €35,60 per MWh has fallen. That is the lowest gas price since July 2021. It remains uncertain what gas prices will do given the developments around Russia. In addition, the high European gas reserves due to the mild winter play a major role in the current price. If the price remains stable and low in the long term, this could give fertilizer manufacturers the opportunity to produce more ammonia themselves instead of importing it.
Global market
There remains pressure on the price of urea and other nitrogen fertilizers on the world market, despite increased demand recently from Europe and the US. Supply remains greater than demand. The supply of urea on the Asian market also continues to increase because China is sharply increasing its exports again. Brazil, the largest importer of nitrogen fertilizers from Russia, also imports significantly. This ensures that pressure remains on the global nitrogen fertilizer market.