Fertiliser Is Going Up I See
Question: What do you do when you've annoyed the buggery out of most of the nation's arable farmers by encouraging them to book their fertiliser at what turned out to well over the prevailing market price with helpful marketing "advice" such as "if you don't book it now there won't be any" etc?
Answer: Come out with a tempting offer next time round, get everyone excited, but restrict the tonnage available at this special "sale must end at 6pm today" approach, turn the phones off & disconnect the fax. Wait for the price of wheat to drop like a stone, announce a price increase, hinting at more to follow, trot out the "if you don't book it now there won't be any" line again, sit back and wait for the orders to flood in. Priceless.
GrowHow Halts Ammonia Production At Billingham
GrowHow UK has temporarily suspended manufacture of ammonia at its Billingham site, the company said in a statement.
"The decision to stop production temporarily is related to the current situation in international ammonia markets with lower activity and price levels, as well as lower industrial ammonia demand in UK," they said.
The plant has an annual capacity of 550,000 tons ammonia, and will startup again when market conditions warrant resuming production, they added.
Interestingly, GrowHow was recently defending it's UK pricing structure, saying that whilst they realised that the price of urea had fallen dramatically "we think this is a short-term market shift, arising from a lull in demand and the credit crunch."
Yeah, right.
Brisk business as 2008/09 fertiliser season begins - FWi
FWi -- By the eve of the 2008/2009 fertiliser season, which officially started on 1 June, prices had been issued for some time and brisk business had already been completed.
Farmers and retailers are so well acquainted by the various factors in the global fertiliser market contributing to todays extraordinary prices, that cost is not so much an issue as volume.
By issuing prices for June, July and August cash delivery, manufacturers have managed to offer at least some kind of early delivery rebate structure and have avoided the kind of mad panic buying which has characterised June in some previous years. All retail customers have been given an allocation of product and are reported to be managing well. The prices are £325/t, £330 and £335 for the three months respectively.
Building confidence
To further attempt to inject some structured confidence into the market, smaller volumes have been tentatively offered through to the end of the year at £339, £342, £345 and £348 for September, October, November and December respectively.
Given that GrowHow has no control over its energy costs, or indeed over global pricing, this strategy includes a degree of risk. Compare the situation in France where ammonium nitrate costs are published only for the month of June. Only time will tell whether this truly represents a reflection of loyalty to merchant and farm customers, or an uncanny insight into future energy pricing.
Potash prices through the roof
While one could argue the modest changes in gas pricing could be absorbed by the manufacturer from time to time, the basic costs of P, K and S are something they can do nothing whatsoever about.
Therefore, compound prices have been published only for June and July and production of some higher PK analyses has been suspended by some suppliers. Potash prices are through the roof with a price of $1,000/t forecast for the second part of the year.
This will particularly affect the aftercut silage market where potash is so important from the agronomic point of view. Usually on a par in price with straight AN, aftercut blends of N and K are now as much as £345/t depending on analysis. This is a market where careful attention to unit prices of nutrients pays off, as there are many analyses to choose from. A less saturated blend will be cheaper per tonne, but may not necessarily be the best value.
Ferts industry told to end secrecy
The only fertiliser manufacturer now left in the UK has been urged to beef up its communications with farmers or risk accusations of taking advantage of its position.
NFU president Peter Kendall said at yesterday's Cereals 08 event in Lincolnshire that the first year with just one manufacturer - GrowHow - had been characterised by "appallingly poor communication" from the whole sector.
"The NFU is challenging the fertiliser industry to get on the front foot when it comes to communications with farmers, and to give a clear indication of why they have reorganised their channels of supply," he said.
"The appallingly poor communication from fertiliser manufacturers has led to real concern among farmers that they could take advantage of being a single supplier."
Mr Kendall warned that the NFU was "energetically" monitoring fertiliser prices throughout Europe to ensure the competitiveness of UK agriculture.
"If prices get out of kilter with our competitors, then we will make representation to the appropriate parties regarding the market position," he said.
Mr Kendall also took the opportunity to urge the Government to make up its mind - the right way - on set-aside policy.
"We have the absurd situation of having the Prime Minister and Chancellor calling meetings over concerns about food availability while at the same time DEFRA is prevaricating over whether to mandate farmers to take more land out of production in the form of environmental set-aside," he said.
"Surely it is time to unleash that productive capacity: We already have a plethora of agri-environmental schemes, cross compliance and regulation overkill.
"Extra production is necessary to meet food demand, and to deliver a plentiful supply of feed into the livestock sector. It is time to let farmers farm."
Mr Kendall also warned of the threat of 30% of pesticides being removed from the market by new EU regulations, with dramatic effects on crop protection and food production.
"We are putting a serious resource into fighting this threat, the severity of which cannot be underestimated," he said.
