Imported AN prices ease further in January: Grain market daily

• UK feed wheat futures (May-24) closed yesterday at £168.25/t, down £1.50/t from Monday’s close. New crop futures (Nov-24) closed at £187.25/t, down £0.45/t over the same period.
• European wheat markets saw few changes yesterday, as support from a weaker Euro was weighed on by ongoing competition from Black Sea supplies and a lull in international demand.
• Despite downwards pressure in US soyabean markets yesterday, Paris rapeseed futures (May-24) closed yesterday at €425.00/t, gaining €3.25/t from Monday’s close. The Nov-24 contract ended yesterday’s session at €428.50/t, up €2.25/t.
• The French farm ministry said yesterday that it has estimated rapeseed area for the 2024 harvest to be at 1.34 Mha, down from its previous estimate of 1.35 Mha.

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AHDB’s latest GB fertiliser prices were published yesterday including data up to January. The figures showed that the spot price for imported ammonium nitrate (AN) eased last month to £350/t. This is down from £354/t in December, and down from £682/t in the same month last year. However, before the outbreak of war and prior to the European energy crisis, the five-year average (2017-21) for January was £241/t, meaning the price of imported AN remains historically elevated.

As could be expected, with natural gas accounting for approximately 60% of nitrogen fertiliser production costs, fertiliser prices have eased alongside natural gas futures. Yesterday, nearby UK natural gas futures closed at 62.19 pence/therm, the lowest since mid-July.

European natural gas prices have eased as of late, with the second-warmest winter in the last decade so far leading to sluggish demand for gas. Lacklustre demand has meant that European supplies have built up and the market remains well stocked at 73% full in the EU. Longer-term, weather forecasts also indicate that it is unlikely we will experience a cold spell next month, helping keep storage sites full, and easing pressure over the summer.

However, strategists at Goldman Sachs suggest that it is too early to say that Europe is through its energy crisis. There are concerns that the switch to dependency on Liquified Natural Gas (LNG) haven’t fully resolved the lost imports from Russia, and as such, prices remain vulnerable to any supply interruptions, or demand volatility. Some traders also suggest that given the current lower prices, we could expect to see a technical rebound in contracts imminently.

The conflict in the Middle East also remains a watchpoint in gas markets. The International Energy Agency (IEA) has warned that the escalation of regional conflict could significantly impact LNG flows in the area. Deliveries of LNG from Qatar to Europe would usually travel through the Red Sea and Suez Canal, though since 16 January, no LNG carriers have come through this route. The IEA has also estimated that demand in Europe will grow 3% this year, though remain 20% below its pre-energy crisis levels (Financial Times).

What does this mean for GB fertiliser prices moving forward?

Looking ahead, domestic fertiliser prices will likely continue to follow movement in the UK and European natural gas markets. While currently EU natural gas stocks are high and demand sluggish, factors such as weather, conflict in the Middle East and global price movement are all key watchpoints. We could also see some technical buying over the next few weeks, which could in turn filter through to fertiliser markets.

AHDB’s Agri-market outlook published last week included more insight into fertiliser and what we can expect from 2024. Click here to read the full report.

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