Despite the fact that the prices of oil and natural gas have fallen enormously, the price of fertilizer has not yet decreased in the Netherlands. However, on the global market it is a different story. Can we still expect a price drop?
The fertilizer market is developing exceptionally. Natural gas in particular is an important indicator for the production of nitrogen fertilizer. 80% of KAS's production costs come from the required natural gas. Yet the link between production and energy prices has increasingly disappeared in recent decades, as producers themselves indicate. You would expect that though record lows should have an effect on natural gas prices. Why is this not the case?
New appointments
The 'fertilizer year' runs from July to May or June. Producers then make agreements for purchasing their raw materials and the fertilizer price is partly dependent on this. Longer-term agreements are also made with wholesalers or the trade. Selling parties therefore use a constant price level. If this is deviated from, it is mainly to be allowed to deliver. Sellers settle for less margin in order to still be able to trade.
This trade is very quiet, according to the companies interviewed. Buying in bulk is becoming less and less common, it is said. Livestock farmers often already have the necessary fertilizer on hand and arable farmers are also less likely to buy in stock. In addition, it is clearly noticeable that more residual flows are used where possible.
Less urea
With a new marketing season just around the corner, traders are trying to buy competitively, but fertilizer producers are adamant. They see the current price level as the bottom and prefer to look up rather than down. This year, producers see that the demand for urea has clearly decreased. Especially because German fertilizer legislation sets additional requirements for the use of this fertilizer, which volatilizes more quickly and is therefore less environmentally friendly. Growers must apply the fertilizer directly or apply a volatilization inhibitor. This is perceived as difficult, so our eastern neighbors use much more KAS. This has been the practice in the Benelux for much longer.
Significant price drops can be seen on the world market. For example, also for phosphate and potassium fertilizers, while they are moving steadily in our country. Worldwide, the price of Mono-Ammonium Phosphate (MAP) and Diammonium Phosphate (DAP) has fallen significantly. On the world market, a ton of MAP now costs $433, compared to more than $530 a year earlier. That price hasn't been this low in a decade. The price of urea on the world market is almost a fifth lower and that of phosphate about 5% lower.
Dutch prices
In the Netherlands, prices are almost set in stone, as the graph shows. The price of KAS27 even increased at the beginning of April, to €22,55 per 100 kilos. The price of Nutramon-KAS actually fell slightly during this period, to €21,30 per 100 kilos. Compared to a year earlier, prices are several euros lower. The prices of potassium salt and triple superphosphate are also very stable.