Secure 2010 Fertiliser Requirements Now
Farmers with the space to store fertiliser and whose cash-flow permits should
seriously consider booking their 2010 fertiliser requirements now to avoid
potential supply issues and possible price increases in the New Year, according
to the AtlasFram Group. Philip Collins, Fertiliser Manager for the UK’s largest
farmer-owned purchasing and marketing business, states:
“With the main usage season just around the corner, fertiliser orders are
currently running at around 70 per cent of normal levels for this time of year,
so there’s a great deal of business still to be done. Given a period of good
weather in the early Spring farmers will want to get on the land to apply
fertiliser. When that happens demand will increase sharply and the market could
start to move quickly, putting significant pressure on the logistics of
manufacturing and moving product. That would increase delivery times and put
upward pressure on prices. Farmers might then find it difficult to secure the
supplies they need at short notice, or be forced to pay higher prices.
“The exceptional volatility which we saw in the fertiliser market last year came
about when global demand for fertiliser products outstripped supply, which led
to massive price increases and manufacturers allocating supplies. At that time
the AtlasFram Group’s key objective was to fulfil the orders which had been
placed by our Members and by working closely with manufacturers and suppliers we
were able to secure all the required tonnage, albeit at higher-than-expected
prices which resulted from global market conditions and were beyond our control.
Farmers who were not in the Group or had not forward ordered found themselves in
an unenviable situation.
“Fertiliser prices peaked in September 2008 as the worldwide tightening of
credit and global recession took effect, which subsequently led to a sharp tail-
off in demand, with prices following suit. Since then the Nitrogen, Phosphate
and Potash markets have returned to more normal trading conditions and prices
have roughly halved from their peaks. Ammonium Nitrate has fallen from
398/tonne to less than 200, urea from 480 to just over 200 and Triple Super
Phosphate from over 600 to under 200.
“The market currently lacks confidence and this view is supported by figures
from the Agricultural Industries Confederation which indicate that compound
fertiliser deliveries have fallen by 40 per cent. Although that situation is
unlikely to change dramatically any time soon, shipping rates are firming,
energy costs are increasing and sulphur prices are rising, which will affect the
cost of Triple Super Phosphate (TSP) and Diammonium Phosphate (DAP), the most
commonly traded phosphate fertilisers.
“Another consideration is that during the last two or three years a significant
proportion of farmers have backed away from paying very high prices and taken a
‘PK holiday’. However, with many test results now showing that soil indices have
slipped back by more than farmers might have expected, demand for these inputs
could increase significantly in the short term.
“Whilst no-one in the industry expects prices to return to their former levels
in the immediate future it is likely that they will rise by more than the cost
of borrowed money, while the volatility of Sterling against the Euro and US
Dollar means that the prospect for price increases is much greater than the
potential for downward movement.
“AtlasFram Group is therefore advising its 1250 Members throughout the UK to
plan their fertiliser requirements carefully and secure product while the market
is stable and prices are at relatively affordable levels.”
Further information is available from Philip Collins, AtlasFram Group Fertiliser
Manager on 01728 727700 or email: philip.collins@atlasfram.co.uk
The AtlasFram Group, which has an annual turnover of almost 150 million,
purchases every type of farm input for around 1050 members farming over 300,000
hectares throughout England. Dealing directly with more than 1400 manufacturers,
importers and local suppliers, with product quality and provenance paramount, it
also markets 180,000 tonnes of Members’ grain, oilseeds and pulses annually
through its grain-marketing department, which is fully accredited under the AIC
Trade Assurance Scheme for Combinable Crops (TASCC).