Higher gas price further boosts fertilizer market

In the past month and a half to two months, the price of fertilizer has increased significantly. The main cause of this is the rising gas price. Gas accounts for around 80% of the input for fertilizer production. Gas prices are currently at their highest level in over a year, explains Peter Arkenbout, marketing and agronomy manager of Yara in the 'Yara Podcast.' In addition to the gas price, the international demand for urea plays an important role in the price increase of fertilizer. Urea is a determining factor for the price of CAN. India, one of the largest buyers of nitrogen fertilizer, has recently been demanding a huge amount of fertilizer. Not only does this have a price-raising effect; China is keeping its borders largely closed to keep its own market stable. As a result, there is less supply worldwide, which also has a price-raising effect.

Impact on Dutch farmers
Closer to home, in the Netherlands and Western Europe, the new season has started and the demand for fertilizer will continue to increase in the coming period. According to Robin Wolf, country manager Benelux at Triferto, the high gas price is not the only reason for more expensive fertilizer. In the second half of last year, there was little demand for fertilizer. This is partly due to the financial situation of farmers in Europe. Lower prices for agricultural products made farmers hesitant when purchasing fertilizer. Wolf indicates that lower grain prices have a direct impact on the investment in fertilizer by farmers in Europe. Now that the season is approaching and the fertilizer actually has to be spread, Wolf and Arkenbout come to the same conclusion: "In the Netherlands, there has been a high demand for fertilizer since January." There are farmers who have arranged their fertilizer supply in time, anticipating price increases. Arkenbout explains: "Traditionally, arable farmers buy their stock spread out over the year, which means they do not buy at the highest prices, but also not at the lowest. Livestock farmers, on the other hand, often wait longer until they actually need fertilizer."

Fertilizer suppliers indicate that current prices are not yet extremely high. "They still have stocks of previously purchased, cheaper fertilizers," says Arkenbout. As soon as these stocks run out, prices will also increase further at fertilizer suppliers. Wolf refers back to the large amount of demand from January this year. Mainly due to uncertainty about new legislation and regulations regarding nitrogen usage space, farmers do not know where they stand. A wait-and-see attitude was adopted in the investment of fertilizers because the question for many farmers was: where do I put my fertilizer? right on in? Wolf also refers to the levy that the European Commission wants to increase on Russian fertilizer, which will certainly have an impact in the short term. "How strict the sanctions will be exactly and when they will come into effect is still unclear. This could cause a shock in the market in the short term. What the long-term consequences will be depends on the ultimate size and implementation of the sanctions, which is difficult to predict at the moment."

Fertilizer substitutes
With high fertilizer prices, the development of Renure is also interesting to delve into as a livestock farmer. "It is logical that alternative fertilizers such as Renure are getting more and more attention, but the impact on the total fertilizer consumption remains uncertain. The most important factor remains the influence of legislation and regulations on the use of fertilizer." This is how Wolf shows. Locally, Renure is a good product for use and processing, but the difference with fertilizer is in the lower element value per ton. As a result, it can only supply part of the market. "It will never be able to completely replace fertilizer."