Fertiliser companies here in Ireland are holding back from purchasing stock at present as prices continue to rise.
Prices have doubled across the board for nitrogen, phosphorus and potash since this time last year and at present show no sign of easing at a time of year when prices usually take a dip.
The current market position is unprecedented and those in the industry are unsure what move to make next.
Here in Ireland farmers are now looking at prices of €400/t for CAN
The market took another blow last week when Yara, the biggest nitrogen producer in Europe, announced it was cutting its ammonia production by 40%.
Over the weekend there were reports of urea prices jumping on the back of this announcement, while some producers are reported to have withdrawn prices.
Here in Ireland farmers are now looking at prices of €400/t for CAN while urea is said to be heading for over €600/t in some cases.
It should be noted that a further increase of €45/t on CAN and €65/t on ammonium nitrate was announced this week
Natural gas prices are playing a huge part in the rise in prices, but high grain prices are still contributing, as large grain-producing countries trade in future prices and purchase fertiliser inputs at the same time.
It should be noted that a further increase of €45/t on CAN and €65/t on ammonium nitrate was announced this week which is yet to filter through the system.
P and K costs spiral
However, while nitrogen has now almost doubled in price since January, it is phosphate and potash prices which have really spiralled out of control.
Product is available and those large grain-producing countries in particular are actively buying
Where farmers are used to being quoted approximately €100/t over CAN for 18-6-12 or similar-type products, industry reports suggest they are now looking at paying €140-160/t or more over CAN. 10s are a further €70-80/t over that price, while 27-2.5-5 is roughly €120/t over CAN.
Product is available and those large grain-producing countries in particular are actively buying but the industry is reporting that there are no stockpiles of product and there are talks of further closures of production plants.
Members of the industry are reporting that they have not seen prices like this since 2007 and 2008.
In fact, the industry is reporting that prices have now passed out those record prices of 2008.
There are numerous factors at play, making it unclear what way the market will move
However, it should be noted that in 2009 prices began to drop.
There are numerous factors at play, making it unclear what way the market will move.
While some are trying to purchase, others are waiting to see how the market unfolds, but will have to move in the coming weeks if they are to secure stocks for the spring.
The cure for high prices is high prices, but how high will prices go before they are cured?