The global agricultural markets are currently experiencing some special outliers. Prices are at historically high levels. This concerns, for example, fertilizer, sugar and rapeseed. There are several reasons for this. We put 3 in a row.
In Europe, a price increase for gas has cornered fertilizer producers. If we are to believe the analysts, the top is far from being reached. This is especially troubling in the United Kingdom, because CF Industries decided to close its fertilizer plants. In the Netherlands, Yara . has announced reduce the production of ammonium by 40% as a direct result of the high gas prices.
How further
Farmers currently have little need for fertilizer. Normally, pre-sale arrangements are used during this period. In view of the price level and the uncertainty, this will happen less this autumn. The increases will not be really felt until next spring. The high energy prices are particularly detrimental to the storage season.
Sugar: price level could rise further
The UK sugar futures market Liffe has reached its highest price level since 2017. A ton of white refined sugar is trading for levels above $500 a ton. Converted that is about €430. Whether beet growers can benefit from this depends on the sales policy of the processors; Cosun Beet Company in this case. Did they record a lot at an early stage or were they hesitant? The higher prices are mainly fueled by Brazil and India, where less cane sugar is produced. In a rising market, sellers are reluctant to do business, further pushing up the price.
How further
Indian exports are expected to decline further, supporting the international price level. The EU is aiming for an average beet harvest at an area that is still below the multiannual level. In the latest Mars report, beet yields of 75 tons/ha on average remained unchanged for the EU 27 plus the UK. Given the high price level for grains and rapeseed, the beet acreage in Europe will not increase next season. The cultivation challenges have become too great for that.
Rapeseed: strong vegetable oil market
The November contract on the Matif in Paris reached a closing price of €24 per tonne on Friday 619,50 September. This has never been the case in the history of the stock. A small Canadian rapeseed crop combined with a huge demand for vegetable oils is causing a sustained uplift effect in oilseeds. As a result, European arable farmers sowed more rapeseed this late summer, although this was made more difficult by rainfall at the end of August. Sufficient moisture has ensured a good start.
How further?
Australia is once again heading for an excellent grain harvest this season. It starts in late November or early December. The rapeseed harvest is also in good shape at the moment. This is especially good news for countries in Asia, especially China. The political relationship between the two countries is precarious to say the least, but shortages of raw materials and skyrocketing prices are changing that. For example, China is now shopping wheat 'down under'. It is also an important destination for rapeseed. Until the new Australian harvest hits the world market, the price of rapeseed is likely to remain unprecedented.