The fertiliser market is in that strange limbo between the end of the arable season and the start of a new one. The spot market for nitrogen is “ticking over” but volumes are only modest. Merchants are using this time to de-stock imported ammonium nitrate (AN) at discount, but the majors have not bothered to adjust the domestic price.

The lull is broken by activity in the grass sector. With such a late spring, the after-cut market is only just starting. NKs are trying to find their price level around £255/t for “full” products with KNS at £250/t delivered. Prices in the Nitrogen and Potassium (NK) sector appear very varied owing to the diversity of analyses on offer. The cheapest is not always the best value so a comparison based on unit value always pays.

New season prices will be announced sometime around Cereals 2010 and a lot of nervous energy is being expended by merchants speculating what that nitrogen price will be.

The important thing is that it will be cheaper than today and that the early buyer will benefit. The key factors are the global price of urea (in dollars) and the sterling/dollar exchange rate.

Key forecasters such as FMB and Fertecon suggest a urea price of $240-260/t in June, through to $265-290/t in the autumn, peaking at $290-310/t in December. These prices are FOB which means we have to add freight, importers margin, unloading, bags, delivery and a merchant’s margin before it gets onto a UK farm.

Then we have to convert dollars into sterling. This factor is currently working against importers as sterling has fallen from 1.50 to 1.44 against the dollar since the election and a weak pound increases prices.

Speculators will take all that into account and put forward a urea price of, say, £234/t to £310/t on-farm June to December. That equates to an ammonium nitrate price of, say, £235/t for December. So, speculate away on the June price. If the pound drops no further, maybe we’ll be looking at £190/t?

Phosphate prices are no longer volatile but are subject to currency fluctuations, hence its modest rise, and while potash prices are currently stable there are signs that manufacturers will seek further rises before the end of the year. Increases of up to £50/t for muriate are forecast in a global recovery of pricing.

Sulphur remains stable with GrowHow reporting no problems in sourcing.

CF industries who joined with Terra have scotched rumours that they will sell their 50% holding of GrowHow to the other partner, Yara.

May 2010 (£/t delivered)*

*All illustrated prices are based upon 24 tonne loads for cash payment month following. Prices for smaller loads and 50kg bags will vary considerably.