Natural gas prices soar in August: Grain market daily

• Yesterday, global grain and oilseed futures markets closed up. This was on the back of renewed concerns over the impact of hot/dry weather on the US maize and soyabean crops, following a Midwest crop tour.
• Nov-22 UK feed wheat futures settled at £266.95/t yesterday, gaining £6.10/t from Monday’s close. The Nov-23 contract was up £8.15/t over the same period, closing at £252.50/t yesterday.
• Nov-22 Paris rapeseed futures gained €12.75/t from Mondays close, to settle at €635.50/t yesterday.

Over the past month, UK natural gas prices have been rising, with nearby ICE UK natural gas futures closing at 526.4p/therm on Monday. This is the highest the price series has closed at since 7 March, when it reached 539.5p/therm, following the invasion of Ukraine. However, yesterday prices did ease slightly, with nearby UK natural gas prices closing at 494.4p/therm.

At the end of July, Russian gas supplier Gazprom, cut the flow of gas running through the Nord stream 1 pipeline to just 20% of normal capacity. The Nord stream 1 pipeline is the single largest pipeline that brings natural gas from Russia to Europe via Germany.

On Friday, Gazprom announced that they will be carrying out maintenance to the pipeline early next month, which will result in a temporary shutdown of the line for 3 days (Reuters). This supply concern is leading to the rise in UK natural gas prices, along with rising liquid natural gas markets in Asia.

With natural gas making up around 60-80% of fertiliser production costs in Europe, the rising costs of gas, have led to some fertiliser manufacturers pausing production, with others shutting plants completely. Here in the UK, CF industries, the largest fertiliser manufacturer domestically, has permanently ceased production at its Cheshire based plant.

Over the past six months, we have seen domestic fertiliser prices soar. In July, the spot delivered price for UK produced Ammonium Nitrate (34.5% N) was over one and a half times (158%) the price in July 2021, averaging £841/t.

As natural gas prices have been rising significantly again over the past month, leading to further increases in fertiliser production costs, domestic fertiliser prices are likely to remain well above year earlier levels in at least the short to mid-term.

With volatility in both grain and fertiliser markets continuing, it is important to have a handle on cost of production, to decide on the rate of fertiliser application for next season’s crops. AHDB have a number of resources to help growers assess fertiliser applications, including the nitrogen fertiliser adjustment calculator and analysis on different application strategies.

You can subscribe to receive Grain Market Daily straight to your inbox. Simply fill in your contact details on our online form and select the information you wish to receive.

While AHDB seeks to ensure that the information contained on this webpage is accurate at the time of publication, no warranty is given in respect of the information and data provided. You are responsible for how you use the information. To the maximum extent permitted by law, AHDB accepts no liability for loss, damage or injury howsoever caused or suffered (including that caused by negligence) directly or indirectly in relation to the information or data provided in this publication.

All intellectual property rights in the information and data on this webpage belong to or are licensed by AHDB. You are authorised to use such information for your internal business purposes only and you must not provide this information to any other third parties, including further publication of the information, or for commercial gain in any way whatsoever without the prior written permission of AHDB for each third party disclosure, publication or commercial arrangement. For more information, please see our Terms of Use and Privacy Notice or contact the Director of Corporate Affairs at info@ahdb.org.uk  © Agriculture and Horticulture Development Board. All rights reserved.