08 Sep Urea prices back on the rise
A RAINY winter in the eastern States cropping belt has sent farmers rushing to secure last minute orders of urea to top-dress their nutrient-hungry crops – less than two months after many distributors were hastily offloading unsold stocks at a loss.
The surge of demand has also coincided with a sudden rush of overseas buying activity since late June triggering global price rises.
Until two months ago world demand for fertilizer – particularly urea – had been in a lull following a price spike during the first quarter.
But by last week export prices for Middle Eastern granular urea from the Arabian gulf were around $US300 a tonne (FOB) – up from about $US220 six weeks earlier.
“Nitrogen fertilizer prices had been about as cheap as we’d seen for a while, after gradually dropping from about $600/t at port early in the season to around $440,” said Ian McGregor at McGregor Gourlay Agricultural Services, Warialda in North West NSW.
“Now they’re around $470 at port and there’s a quite a bit more topdressing activity than normal.”
Major supplier, Incitec Pivot also anticipates ongoing demand for nitrogen products into spring from summer croppers keen to take maximum advantage of their full soil moisture profile.
Poor global grain prices early in the cropping season, combined with the late summer price spike, meant most Australian farmers deliberately avoided over-investing in fertilizer at planting, worried poor grain prices and doubtful seasonal conditions would leave them with well out of pocket by harvest.
Instead, however, most cropping areas have thrived on good winter rainfall and in July prices bounced dramatically giving croppers the promise of a big harvest result, but many have less than 70 per cent of their preferred nutrient applications feeding their crops.
Melbourne-based national fertilizer manager with farm services giant, Landmark, Josh McGregor, expected urea prices at port to climb to the mid $500/t mark in the next two months.
The prices were a sharp turnaround from the position six weeks ago when suppliers – including several newer players in the market – were caught holding too much product and were opting to quit their warehouse stocks at cost prices.