The fertilizer market is feeling a bit unstable. On the one hand, little is happening on the price front, but on the other hand, there is turmoil about exchange rates, energy costs and political developments in the world.
Farmers are currently filling up their nitrogen space, but otherwise the market is quite quiet. Also quieter than last year. However, prices will become slightly firmer at the end of August/beginning of September, creating a better bottom in the market. Clear declines are therefore not as expected.
KAS prize
Nitrogen-containing products, such as KAS and Sulfan, are rising in price. For a tonne of KAS, farmers pay between €19 and €20,50, depending on the order size. Prices were at a lower level in the summer, but are now increasing again. There is hardly any action on the phosphate and potash market. "The potassium market has settled at a slightly higher level due to new contracts with India and China. This has now stabilized," said Harry Smit, analyst at Rabobank.
There is also no real direction to be discovered. Black Sea urea is $202 per ton, a higher level than last summer when this fertilizer was still around $180. “This is still not high considering 2014 levels were at $300 and above.”
Nervousness and energy costs
An explanation for the rising prices is sought in the unrest. The recent natural disasters have not led to fluctuations in fertilizer prices, but North Korea is causing nervousness in the markets. What will happen there and what reactions will result from it? What will this change in the positions of China and Russia?
Furthermore, the increases are driven by higher energy costs. Industries therefore demand more for their end product. "However, the stronger euro helps to reduce prices again, because many substances are imported. This applies less to KAS."
What will be cheaper?
Yet a great leap forward is not obvious. Nobody has to worry about a shortage of fertilizers. There is actually overcapacity worldwide. "Certainly in phosphate and potassium. These products will become cheaper in euros," Smit expects.
The best gauge for this moment is the unrest in the world. For the farmer who wants certainty, now is probably not a bad time to buy, but it will not be very exciting in the near future.