Imported AN prices continue to ease with natural gas: Grain market daily

• UK feed wheat futures (May-24) closed yesterday at £191.95/t, down £0.55/t from the previous day’s close. New crop (Nov-24) futures closed down £0.25/t over the same period, to end the day at £205.50/t.
• Though US and Paris wheat both saw a little support yesterday, domestic futures saw the influence of some strengthening of sterling.
• Paris rapeseed futures (May-24) felt some support yesterday, gaining €3.50/t, to close yesterday at €427.75/t. Nov-24 futures gained €2.75/t over the same period, to close at €435.00/t. Rapeseed markets gained alongside Malaysian palm oil yesterday.
• According to consultancy Glenauk Economics, palm oil prices are expected to rise by Q3 2024, with the price of meal under pressure due to high supply, a dynamics change is expected.
• Today, the latest data to November 2023 for UK Human and Industrial cereal usage and GB animal feed production has been released.

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This week, the latest GB fertiliser prices have been released with price data up to December 2023. Imported AN (34.5% N) was quoted for December at £354/t. Though this is just back another £5/t from November’s quoted price, this signifies the third month on month reduction in the imported AN value.

Year-on-year, December’s price is back 49% from December 2022, quoted at £700/t. Though, remains higher than December 2020 which was quoted at £217/t.

Natural gas futures continue to ease

Natural gas is a key feedstock for fertiliser production. Yesterday, nearby UK natural gas futures closed at 77.13 pence / therm. On the same day in 2023 (10 Jan), this close was quoted at 171.3 pence / therm, therefore year-on-year this price is back 45%. Since the start of December too, nearby UK natural gas prices have dropped back 30%.

Domestic futures have fallen with prices on the continent. European gas prices have fallen to their lowest levels since August, even despite a cold snap, with large reserves looking to see the winter through. As at Monday, EU storage stood at 83% according to Gas Infrastructure Europe. Norwegian gas flowing into the continent, plus slow demand, has pushed prices lower over recent weeks. With such strong reserves, this will likely keep prices subdued for natural gas short term.

Looking ahead, where next for natural gas and ultimately fertiliser prices? Well, UK natural gas prices continue to price at a premium for the Nov-24 contract, compared to the May-24 contract, looking ahead for next winter – as you can see in the graph below. From the start of December, this premium has held and slightly increased. As at yesterday’s close, the premium stood at 12.27 pence / therm, compared to a premium of 11.58 pence / therm on 01 December.

With a supported price outlook currently into next winter, this may limit falls in fertiliser prices longer term, though short term, easing natural gas prices continuing provides some relief.

Though fertiliser prices have eased significantly year-on-year, input costs remain elevated creating a difficult environment for many businesses currently. For a look at other input costs, the next release of Defra’s Agricultural Price Index is due on 25 January looking at ag price inflation, and see the latest insight on input costs including fertiliser, due in AHDB’s Agri-Outlooks to be released on 08 Feb.

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