Geopolitics creates volatility in global fertiliser markets

The fertiliser trade continues to be particularly unpredictable with heavy fluctuations in prices as a result of geopolitical tensions.

Markets have wavered for some time, firstly driven by the war in Ukraine and more recently as a result of conflict in the Middle East.

Merchants say urea had been trading at roughly £330-£350/t in the past week, however it continues to alter each day.

See also: Carbon tax on fertiliser due to hit farms and food prices

Currently, high energy prices are supporting the market with some European manufacturers limiting production as a result of high ammonia costs and limited farmer buying.

In the UK, it is understood that CF is running below its full capacity due to high costs.

Nitrogen prices are very much linked to energy prices, and energy is very much linked to geopolitics, according to Origin Soil Nutrition managing director Michael Pater.

“Things are getting more and more led by geopolitical factors,” he said.

“What we are seeing in terms of volatility is that nitrogen, specifically urea – which is a global commodity – can literally have a price in the morning and then several hours later you can be up US$20 (£15) to US$30 (£23).

“Energy costs now are far higher than they should be. The UK is over 95% full in terms of gas, so why are we paying the gas prices that we are?

“Urea is now too expensive – if you are going to buy urea and put an inhibitor on, it is now more expensive than nitrate.

“You are forever looking at the different cost per unit of the different products.”

The outlook for phosphate over the next few months is firm due to rising costs of ammonia and lower domestic supplies, say traders at Frontier.

Potash remains more stable, having reached a floor in the market.