Cereals 2011: Fertiliser prices to remain high   

Fertiliser prices, principally nitrogen, are on the increase again and predicted to remain firm until year end at least.

"A day is now a long time in the fertiliser market,” said GrowHow’s Ken Bowler who pointed to yesterday’s 20 dollar per tonne increase in the global granular urea market within the space of the day. Finishing the day at 530 dollars, the price was 300 dollars per tonne ahead of the same time last year and 200 dollars up on April this year.

"This has surprised the markets in Europe and Great Britain,” said Mr Bowler. “Ammonium nitrate  was £210 per  tonne retail 12 months ago. This week the August price was £323. The nitrogen market is very bullish. When we set our new season price this there was a feeling the traditional early buyers might be cautious. However they came to the market as they normally do and we are virtually sold through to August,” said Mr Bowler.

And all the current indicators were that forward buying will have paid off as prices looked set firm to the end of the year, not only for N but compounds as well. He did not rule out some price correction in 2012 but before then, he predicted further significant increases and rumour at the Cereals event was it could be another £30/tonne.

The situation was entirely down to global demand against available supply, said Mr Bowler. Cost of production was not the determining factor. Egypt for example had a low cost base but its price was quite simply set on what the market would stand.