Market Morsel: Fertilizer – Winter is coming.

Inputs | 19th August 2022 | By Andrew Whitelaw

Market Morsel

Over recent months, we have been out and about doing a bunch of presentations to different groups. The biggest concern most throughout the supply chain have is related to inputs.

We cover input markets because they are important to overall margins, and they are all expensive. Whatever you need it is expensive – labour, chemicals, steel, wood, fuel or fert. The only cheap input in agriculture at the moment is the high-quality analysis written on the EP3 website 😉.

So let’s look at fertilizer.

Firstly, anyone reading EP3 updates will be aware that gas is the primary input for urea, although coal is used in some countries (China). If gas prices rise then we see a corresponding increase in the cost of Urea.

We have seen oil prices fall in recent weeks. However, gas pricing has remained strong. This is largely down to concern about supplies of gas in Europe and their reliance on Russian supplies. Europe needs gas for heating, and while it is hot just now – winter is coming.

Whether it is a mild or cold winter will have a huge impact.

In our ‘cost, freight and discharge’ pricing, we see that Australian values for Urea have increased from approx A$929 to A$1006 over the past month.

It is important to remember that this pricing is for gaining an insight into the trend of a replacement value and doesn’t necessarily represent the price locally. This price doesn’t take into account margins etc. We expect that pricing levels for fertilizer will remain elevated for quite some time.

Tags

  • Fertilizer