Nitrogen Prices Drop Globally – How Low? How long? At the end of the main fertilizing season, the N prices usually drop. In order to sell the year-round production at the few main locations worldwide, low-price incentives are created in the months with weak sales in order to bring the heavy-duty fertilizer as quickly as possible to the many consumption locations in the world. An early bird bonus has been around for decades. However, the situation has changed significantly in recent times. Energy prices make up around 80% of the N fertilizer production costs. Natural gas prices are at the forefront, having risen significantly since autumn 2021. In the dispute with Russia, the Ukraine crisis has led to sensitive delivery restrictions, which have triggered an additional boost in energy price increases. High fertilizer prices are also favored by high cash crop prices.The yield achieved through the use of fertilizer leads to additional income for the farmers due to the price; the expensive use of fertilizer is fully or partially covered. As a result, the demand for fertilizer will only decrease to a limited extent. A highly concentrated fertilizer industry has sufficient market power to enforce higher prices on the buying side to cover its own costs. However, the most recent nitrogen price development shows a clear downward trend from just under $1,000/sht for granulated urea to around $500/sht, despite the slightly weakened natural gas and grain price levels. In this way, the manufacturers want to ensure that the storage costs for the goods that are constantly being produced are distributed as widely as possible in the supply chain until the next fertilization season. Rising interest rates reinforce the development. The stock market prices for the coming delivery months show that falling prices for urea will continue into July/Aug. 2022 and then increase again significantly. Support comes from the rising natural gas prices in the pre-winter months.
