Fertiliser demand in wholesale markets remains sluggish, and prices, which fell sharply in the past few months, remain subdued.

According to Michael Samueli of Profercy, Egyptian Granular Urea FOB prices fell by almost $100/t last Friday to around $600/t, stimulating increased purchasing over the weekend. They have since shot back up to $700/t.

The Egypt price peaked in late March at $1,150/t. According to CRU Group, both US and Black Sea granular urea FOB spot prices have now fallen to 2021 levels.

Gas price remains volatile

As the bulk of annual fertiliser buying has concluded in the northern hemisphere, buyers are likely to take a cautious approach to market developments.

European gas prices surged by almost 30% last week over supply challenges, both from Russia and the US. This will impact nitrogen production costs in Europe.

This week, the International Energy Agency warned that Europe must prepare for a total shutdown of Russian gas exports. This will likely weigh further on fertiliser markets. It may result in production curtailments.

Potash prices have impacted demand in some markets, with prices softening in Brazil but largely stable in other markets, according to Humphrey Knight, Cru Group.

Sanctions against Belarus are having the greatest impact on potash supply. Market sources suggest that Russian fertiliser exports are running at 80% of last year.

Demand factors

Several factors have exerted downward pressure on prices. Poor weather conditions in the US delayed planting and fertiliser purchasing impacting demand during peak trade. This resulted in cargoes lined up at US ports being sold on to Brazil and Mexico.

A significant Indian tender, expected in April, was delayed until a few weeks ago. In the event India booked a large amount of product, however, given the buildup of product in the market it was not sufficient to provide a floor.

Wholesale buyers may be more wary of purchasing over the summer month if prices continue to fall.