New fertiliser season 2020

GARETH DAVIES

The new Nitrogen season has kicked off with early terms offered on farm. Place your needs on the YAGRO Marketplace to get direct offers from leading wholesalers.

To make the right call at the right time, it’s important to understand how prices are set, and what supply chain dynamics are important:

  • Nitrogen fertiliser is a commodity: price is set by farmers’ affordability – normally driven by the previous season crop profitability. Producers are always keen to keep factories pushing at maximum output to cover the fixed costs of production.

  • So: a great harvest with high grain prices will push fertiliser prices high – the farm can afford it. 

  • A poor season, correspondingly, will push prices down. Furthermore, under the current cash strained environment, suppliers will be looking for certainty of early delivery and payment – and handsomely rewarding farmers who can do so, with reduced prices.

We are seeing this play out in this season’s early offered prices below £190/t for Ammonium Nitrate (34.5% Nitrogen, 36m spread) – see the chart below. With comparable grain prices in June of each year (£150-170 /t), we see the direct correlation of Nitrogen price to wheat yields. Prices have started out relatively low, showing a good opportunity to lock in below budget.

In balance, consider your business’ ability to take on early supply. Does a reduced yield make some space in the sheds for some bulk fertiliser? Facing a tougher year for profit, is your cash position comfortable enough to take advantage of current deals? Some suppliers are currently offering fair terms to December 2020, to help those businesses under pressure.

Will fertiliser prices stay low? It will depend on the real outcome of this year’s harvest. Should things turn out better than feared, we should see a price rebound in Nitrogen. Should heavy rainfall plague the whole harvest season, prices could fall further still.

Each business will face a different balance of these trade-offs, and appetite for risk. At YAGRO we can help you stay sharp to the market with direct offers from fertiliser 
wholesalers, whenever the right time to buy for your business.