As farmers globally are struggling with escalating input prices, governments, including our own, are scrambling to put in place supports aimed at maintaining global food production.

At the same time, the fortunes of global fertiliser producers are coming into sharp focus. It is being reported that global fertiliser producers are set to post their biggest quarterly profits in years.

The war in Ukraine has resulted in soaring nutrient prices as a result of global supply challenges.

Prices, which were already trading upwards prior to the war, are being influenced by a combination of natural gas price hikes and sanctions against Russia and Belarus.

Grain driving margins

In Europe, Yara, which reported its first quarter results at the end of April, saw operating margin grow from 10.2% to 14.5%.

Similarly, German producer K&S projects an increase in core profitability of 40% for 2022 compared to 2021. The prospect of strong grain prices internationally is likely supporting strong returns in the sector.

Nitrogen producers have continued to manage production margins, introducing curtailments as production becomes uneconomic due to natural gas prices.

It is too soon to understand the impact of fertiliser prices on application rates and ultimately on food availability globally.

Investor unease was clear in the corporate withdrawal from Russia. The question is, will the collective conscience of the investment community be willing to bear strong profit growth should it come at the expense of world food supply.

Irish fertiliser imports remain strong

Despite challenging market conditions, Irish fertiliser imports to-date remain in line with volumes imported in the 2020-2021 season, analysis of Central Statistics Office (CSO) data shows. Urea imports in February were up 18% on the previous year. The average import price of urea landed in February was €659/t. Imports of calcium ammonium nitrate (CAN) were down 3% year-on-year in February.

The average import price in February was €540/t. Combinations of NPK (such as 25-2.5-5) landed were up over 150% at an average import price of €664/t. Much of the fertiliser landed in February was likely bought pre-Christmas.

The total volume of fertiliser imported in the October to February period is up 12% year-on-year. However, this represents only about 40% of the total season volumes.

The fertiliser import season runs from October to September.

In that period, volumes of urea imported are up almost one-third year-on-year, NPK import volumes have almost doubled, while CAN import volumes are down almost 20%.

March and April account for significant fertiliser import volumes, typically in the region of 500,000t.