Fertiliser prices continue to climb

Thursday, 11 November 2021

By Kat Jack

The latest GB fertiliser prices are out, and the rise in prices is clear. The official figures show that September prices averaged £395/tonne for imported ammonium nitrate (AN), with a sharp upwards movement through the month. A UK produced AN price was not available in September, due to a shortage of product being traded, but had previously been trading at a premium to imported in the preceding months. Official figures for October and November are not yet available, but anecdotally there are reports that price increases have continued, to £700/t and beyond for some.

  graph showing increase in AN fertiliser prices

 

What’s the outlook for fertiliser prices?

If we focus on AN, the main driver of the current high prices is the high gas price, since natural gas is a key component for producing AN. Gas prices have been so high that key fertiliser production plants in the UK were closed down – and similar actions have been seen internationally. The government sorted an agreement for one plant to be reopened to ease the accompanying CO2 shortage, and the agreement has been extended to early 2022. However, it is unclear how much extra fertiliser will result from this deal.

Currently, the short-term outlook for gas prices is they will remain supported, and so the outlook is similar for fertiliser. It is possible that we see higher prices yet before the spring. Even if prices do fall back somewhat, they are still likely to settle at a relatively high level.  

 

So, how can farmers manage their fertiliser costs?

For those who grow cereals or oilseeds, AHDB has published updated guidance on nutrient management. This looks at how fertiliser usage should be adjusted based on the new, higher ranges of crop and fertiliser prices we are seeing, to give the best economic balance. Although updated data for grassland is not currently available, a similar assessment should be made evaluate costs and assess whether they can adjust their fertiliser requirements. 

 

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Katherine Jack

Analyst - Dairy

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