Fertiliser prices haven't bottomed out yet
Published 27/01/2016 | 02:30
Agricultural prices according to the FAO's food price index have fallen by close on 30pc from 2011 to 2015.
The cereal price index alone for 2015 was down by 15pc.
High world grain stocks, the largest in almost 30 years, in tandem with a slowdown in the Chinese and other developing economies, falling oil prices and the resulting turmoil in financial markets continues to pressure world grain and other agricultural commodity prices lower as we move into 2016.
With the world cereal sector by far the largest user of fertiliser the forecast from fertiliser analysts and industry insiders is for fertiliser prices to fall further due to slackening demand and plummeting growers' incomes.
Despite rapidly falling energy and agricultural commodity prices and lower shipping/freight rates European fertiliser manufacturers have been reluctant to reduce fertiliser prices to reflect the new realities.
The continued imposition of anti-dumping duties by the EU Commission on imported fertilisers containing ammonium nitrate, which range from €27/t to €47/t coupled with a customs tariff on imported nitrogen and phosphorous from Most Favoured Nations, is stymying real competition within the European fertiliser market.
Consequently EU farmers are paying a significant and unjustified premium for fertiliser.
The protection afforded to EU manufacturers has seen their net worth grow significantly in recent years. IFA is leading a campaign to have the anti-dumping duties and customs tariffs abolished and has called on the EU's DG Competition to instigate a sector enquiry into the European fertiliser industry.
International wholesale fertiliser prices have begun to slip in recent weeks at a time of the year when manufacturers normally try to push through price increases as demand ratchets up across the northern hemisphere ahead of the spring.
On the nitrogen front urea, which is a globally traded product, is leading the price drop. Latest reports from France show wholesale bulk granular urea prices slipping further this week, now discounting early 2015 season quotes by approximately €100/t.
This will inevitably put CAN and ammonium nitrate prices under pressure. However, European manufacturers were attempting until lately to talk up CAN and AN prices.
Latest EU wholesale quotes for bulk CAN are €30/t to €35/t behind early 2015 prices. DAP prices have also moved considerably lower in recent weeks. International prices for North African and Russian origin product are down by US$75/t to US$100 on this time last year. European potash prices are marginally down by approximately €10/t lagging price drops of US$30/t to US$40/t for Baltic/Black Sea and North American origin product.
On the home front early season quotes for fertiliser saw CAN prices drop by €20/t and granular urea by €40/t compared to the same period last year.
Merchants and distributors over recent days have been attempting to talk up prices despite the fact that wholesale prices are on a downward trajectory and haven't bottomed out yet.
However, they are meeting strong resistance as commodity prices across the board and resulting incomes continue to fall. Granular urea in top lift big bags has traded from €340/t to €370/t delivered farm with CAN in single lift bags trading from €262/t-€280/t.
Cut and pasture swards are trading around the €370/t to €400/t price mark. The keenest quotes are in the North East and North midlands.
It is important that farmers shop around before purchasing as there is a significant variation in prices.
Coordinating full loads among a few neighbours can deliver significant savings as transport is a major cost in moving fertiliser. It is clear from the CSO price data that buyer groups and individual volume buyers are buying fertiliser at a significant discount to the officially reported CSO prices.