Fertiliser - Great value at current prices due to recent downward drift
Farmers are benefitting from lower energy prices - particularly in relation to natural gas which is the feedstock for the nitrogenous fertiliser industry.
Lower production costs have been reflected in pricing but lack of farmer demand has also contributed to a downward drift in recent months.
The poor Autumn weather across Europe has caused major difficulties in planting winter crops - with the winter wheat acreage reduced by up to 30% in some regions. This has directly affected the demand for fertiliser and markets have weakened as fertiliser movements to farm have slowed down.
Merchant deliveries continue to be sluggish as the current period of heavy rainfall is dashing hopes of an early spring and a few weeks dry weather will be required before farmers can contemplate any field work. There is concern within the trade that delayed purchasing will result in logistical challenges in relation to farm deliveries when weather turns more favourable.
Fertiliser is very good value at current prices. Farmers should look at their soil analysis and aim to correct nutrient deficiencies in a year when product is good value.
All the major nutrient, ie Nitrogen, Phosphate and Potassium, are at a lower cost than for many years. That soil analysis result is the vital first step and farmers should start by an assessment of the pH level. The application of lime to establish the optimum pH in the soil is the best investment a farmer can make as this will improve the availability of all the other nutrients.
Indications are that the market is showing signs of a firmer tone to pricing and ironically this is being driven by strengthening grain prices on the global market. Concerns about the reduced acreage of wheat planted and projections of a lower harvest in 2020 are pushing up grain prices.
Grain price is the principle driver of fertiliser demand at a global level with the amount of fertiliser applied directly related to the price expected for the crop in many regions.
The environmental impact of farming continues to be very much in the spotlight with concerns about the release of ammonia and greenhouse gasses to the atmosphere. The release of Nitrous Oxide from nitrogen fertiliser is a contributor to these emissions. The concept of treating urea with a urease inhibitor is now well accepted and the experience on farm indicates that the improved efficiency of nitrogen utilisation is not only reducing these emissions but also producing significant yield benefits.