The prices for mineral fertiliser are remaining stable.
Due to the fall in crude oil prices in past months, the fertiliser trade and agriculturists have been expecting fertiliser prices to fall – especially in the nitrogen fertiliser segment. However, in the meantime it has become apparent that the opposite is true.
In spite of falling energy costs, the fixed price level will continue into spring of 2015. Ralf Reinersmann, the sales manager for the fertiliser department at AGRAVIS Raiffeisen AG, takes a quick look at the present market situation and explains the current price level.
Mr. Reinersmann, what does it look like on the market for fertiliser at the present?
Reinersmann: These days we can see that the development in crude oil prices is diverging from the development of natural gas prices. It is very clear that natural gas prices are falling at staggered intervals in relation to the crude oil prices. However, the prices for crude oil and natural gas are crucial to the fertiliser business because the production costs for nitrogen fertiliser are highly dependant upon the ammonia price. In turn, this is closely coupled to the natural gas price.
What are the reasons for the stable price level with mineral fertilisers?
Reinersmann: The large-scale international producers still have production bottlenecks in their ammonia supply. For example, the Ukraine, one of the most important ammonia producers, has to purchase expensive gas in Europe since the supplies from Russia are restricted.
The same applies to the north African producers of ammonia where natural gas for fertiliser production is only available to a very limited extent.
A third aspect is the very lively demand for fertiliser on the international scene since autumn 2014. Here, the supply and demand are almost on balance. Furthermore, we are witnessing the fact that fertiliser producers are hardly building any stocks.
Finally, currencies have an essential role to play when importing fertilisers. The strong dollar is making fertiliser imports more expensive into the European realm.
How will prices develop in the near future?
Reinersmann: Nitrogen fertiliser and also di-ammonium phosphate (DAP) will remain stable for the near future. The cover ratio for DAP is much lower on the average for Germany than the lang-term mean. The reserved attitude to purchasing corn fertilisers is owed to the high prices based on dollars and the weak euro. Of course, there's a lot of catching up to do, especially because these goods are supposed to be in the trade's warehouses no later than Easter. Everything is pointing towards stable prices for potassium products as well. If we take a look at the world market currency in the potassium segment, the 60 potassium, international prices are firm.
What can you recommend to agriculturists?
Reinersmann: There will only be a change in this trend for fertiliser prices when there is a significant slump in global demand and/or if the euro is much stronger than the dollar.
Since neither factor will be in the offing in the foreseeable future, it is advisable to at least stock up with fertilisers for the consumption period to the end of April.