Europe’s largest nitrogen producer, Yara, reported a 7% rise in full-year profits (EBITDA) for 2018 to reach $1.53bn (€1.35bn).

The higher performance was driven by higher margins and acquisitions during the year. Sales increased 14.5% to $13.1bn (€11.6bn) in 2018.

When acquisitions in Brazil are excluded, fertiliser deliveries fell 3% as a result of lower nitrate deliveries in Europe, according to the Norwegian-headquartered company.

The improvement in margins was driven by higher urea production margins in its Canadian plant and higher phosphate margins in the company’s NPK plants.

Fertiliser markets

Yara said that the global urea balance returned to a deficit in the second half of last year, driven by strong demand.

International urea prices were up $39/t in the last quarter of 2018 compared to 12 months earlier. International ammonia prices (a key component of CAN) were $40/t higher than in the last quarter of 2017.

The company blamed higher natural gas prices which have raised the cost floor for producers in Europe.

It also said that the market was supported by some curtailments of ammonia supply, not related to market conditions.

Nitrogen deliveries across western Europe in the last quarter were down 17%, according to Yara.

Yara says it is seeing an increase in gas prices for the first half of 2019

Season to date, nitrogen deliveries are down 10% on the previous season.

In summary, Yara’s market environment is improving, due to a combination of a tightening global grain balance and receding urea supply pressure.

On top of this, Yara says it is seeing an increase in gas prices for the first half of 2019.

What this means for farmers remains to be seen.

However, it looks like there is little weakness in the market over the coming months.