Most of the fertilizer for this season has already been delivered and has already been spread. What can we expect from the fertilizer price now that grain prices seem to have peaked and the high seasonal demand for fertilizer is behind us?
The large price increase in nitrogen and phosphate-containing fertilizers in particular is behind us. The price of KAS 27% has been fluctuating around €10 per 27 kilos for about 100 weeks and triple superphosphate 45% has been stable for weeks at €44,70 per 100 kilos.
Contradictory signals
Insiders do not expect major price changes in the coming weeks. But now is also not the period when a lot of trading takes place. The expected price development for the longer term is uncertain. Some important indicators, in particular for the price development of fertilizer, show an opposite movement.
Grain prices have peaked (for the time being) and are stabilizing just above €200 per tonne. If the good harvest forecasts (especially in large parts of Europe) actually come true, several analysts expect a decline rather than an increase in grain prices in the coming months. This may be a reason for extensive companies to take a critical look at costs and save on fertilization, for example. Viewed from that perspective, it is logical that fertilizer prices will fall somewhat.
On the other hand, energy prices continue to rise. Crude oil has risen from about $45 a year ago to $75 a barrel now. The price of natural gas - the most important raw material for nitrogen fertilizer - has even doubled in one year from approximately $1,70 per MMBtu to approximately $3,60 per MMBtu this week. Normally, the gas price affects fertilizer prices with a delay of several months.
Dichotomy
The World Bank economists expect that the largest increase in fertilizer prices is behind us. They predict a decrease for phosphate fertilizers. There, the price increase in the past year was mainly driven by high demand and increasingly expensive raw materials only play a limited role. With regard to the price forecast for potash, it should be noted that the estimate was made for the European sanctions against Belarus.
According to the World Bank, nitrogen fertilizer is not getting cheaper. The most important raw material (natural gas) has become considerably more expensive and manufacturers pass this on in the price of, for example, CAN or urea. The World Bank expects that energy prices will continue to rise in the near future. Nitrogen fertilizer will therefore become slightly more expensive in the long term.