Traders see more upside in steady fertiliser market

UK farmers are being urged to consider placing orders early for their spring fertiliser supplies, rather than risk facing a logjam early in the new year and the potential for higher prices.

Despite a period of flat prices in recent weeks, with AN currently quoted at about £380-£390/t delivered to farm for January, and urea closer to £400/t, traders warn that there is plenty of potential upside to the market.

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“India is currently inviting tenders for up to 2m tonnes of urea, with offers due in by mid-October,” said Lucy Hassall, fertiliser manager at Openfield.

“Once we see those offers, we will have a better idea of the available tonnages out there.”

However, she also expects stronger demand for urea from continental Europe, following the imposition of tariffs on imports from Russia, with buyers looking to other sources for their supplies, such as Egypt and Algeria.

“That could further tighten supply, as those are the markets the UK uses,” she said.

China withdrawal

Another “bull” factor is that China, having returned to the urea export market towards the end of summer, depressing global prices, is now expected to close off those supplies and concentrate on its domestic requirements.

Mark Southwell, fertiliser procurement manager with the farm supply co-operative AF Group, also believes there is more upside to the market, despite the current lack of farmer buying.

“With the wheat price at about £160/t, farmers want the market to ease considerably, but that is unlikely to happen,” he said.

“Waiting for the fertiliser price to drop is a high-risk strategy, especially given concerns around availability in spring. Waiting for a considerable drop in price versus not having product on farm is not worth the risk.”

New tax

Along with global supply, Mr Southwell points to the new Carbon Border Adjustment Mechanism – to be introduced by the EU in January 2026 and the UK the following year.

This will amount to a tax on fertilisers brought into the EU.

“This will make it more likely that EU manufacturers will prioritise their own internal market first, rather than exporting so much, which may restrict supply and lead to a tighter UK market,” Mr Southwell suggests.

He acknowledged that many farmers are facing cashflow difficulties, with low grain prices. However, most suppliers would be willing to offer deferred payment terms on orders placed soon.