Market Morsel: Suffering from gas?

Market Morsel

As an agricultural analyst, we look at a lot of commodities outside the normal agricultural ones. We keep a close eye on the energy market because the relationship between energy and agricultural markets is tight.

Natural gas is an essential commodity because it is a major ingredient in the production of agricultural chemicals and synthetic fertilizers.

In the last couple of years, we saw natural gas rise to extreme levels due in part to the Russian invasion of Ukraine.

Russia was a contributor to around a third of the natural gas used in Europe, which has now been effectively turned off.

Gas prices have been under pressure in recent weeks in Europe and the USA. US gas futures dropped 5% last night to US$1.61, the lowest level since 2020.

If lower gas prices persist, then we can see this reducing the price of urea. This will be beneficial to producers who have paid high levels in recent years.