The European fertilizer market has been showing a quiet phase since April, especially in the nitrogen segment. Demand from arable farming and dairy farming is currently low, because the first fertilization moments for many crops have already passed. Grassland is still waiting for a growth spurt for the first cut and on arable land the first nitrogen applications have already been applied to the crops. What are the expectations for prices?
The price development for KAS and Urean in particular is influenced by decreasing input costs, especially for natural gas. The European gas price has recently decreased due to geopolitical developments. LNG that previously went to China is now being diverted to Europe due to US import duties. This shift eases the cost structure of European ammonia and nitrate production, which translates into a lower cost price basis for nitrogen fertilizers.
There is currently no trading, insiders indicate. This is typical for the fertilizer market, in which periods of high activity alternate with lulls, it is said. The expectation is that the stable prices will continue to fall in the course of April. Cash is currently trading for just under €40 per 100 kilos. Based on the lower gas price, a decline is in the offing, as historical price trends indicate.
Liquid manure more attractive than ever
The price-wise ratio to liquid manure is unfavorable for artificial fertilizer. Due to the high prices, arable farmers often use maximum manure in, as long as the placement space allows. Due to the dry spring, both livestock farmers and arable farmers have spread a lot of liquid manure, which sometimes resulted in the full use of this year's placement space. An additional factor is the uncertainty about the effect of measures regarding nutrient-polluted areas. Less space for extra use of nitrogen can reduce the total demand for nitrogen, it is said. Peter Arkenbout, marketing & agronomy manager at Yara, says: "The application of animal manure is effective, but it does depend on sufficient precipitation to be able to work well. Without sufficient moisture in the soil, the availability of nutrients from liquid manure is limited, which affects its effectiveness. During periods of prolonged dry spells, artificial fertilizer remains important for efficient crop control. Providing the right nutrition at the right time remains essential for a good crop yield."
Political tensions
Meanwhile, the market remains in the grip of political tensions. For example, the European Commission wants to increase levies on Russian fertilizer. It has already become clear that this could have consequences for the European fertilizer market. The European Parliament will make a decision on this on May 14. At the same time, Trump's role on the world stage is once again an unpredictable factor. His policy on trade and energy can have an indirect effect on European raw material prices. Arkenbout emphasizes that the direct impact of geopolitical developments, such as Trump's trade policy, for Yara remains limited for the Dutch market at the moment. "Yara's fertilizer production takes place largely in Europe, with factories in Sluiskil (Netherlands) and Rostock (Germany) and is also mainly sold within the region. As a result, we are less dependent on global trade flows. However, global uncertainty such as fluctuations in energy prices or international sanctions can indirectly lead to price volatility."
Arkenbout indicates that purchasing fertilizer is a strategic decision that requires much more than simply responding to short-term demand. For buyers, it is essential not only to keep an eye on the current market situation, but also to anticipate possible geopolitical developments and market disruptions that can affect the price and availability of fertilizer. According to Arkenbout, buyers are wise to purchase fertilizer at different times during the season.