Have the fertilizer price increases reached their peak? The fertilizer prices, which have risen since the beginning of 2021, have risen sharply again in the last 3 months. The purchase prices for KAS are traded above 620 € / t. Diammon phosphate (DAP) reaches the line of around 800 € / t. Granulated urea is hovering around $ 900 / t free port. Potash increases from 265 € / t in August to the current 375 € / t in November 2021. This means that the current fertilizer prices are twice to almost three times higher than the multi-year average values. Several factors contributed to this.
- At the global level, China's export bans and, more recently, Russia's, triggered increasing shortages.
- Added to this are the price increases for natural gas, the main cost factor in nitrogen production, which have led to production cuts and plant closures.
- The bottlenecks in international transport capacities have contributed to further price increases for the heavy load fertilizer.
- Increased grain prices provide sufficient reasons to pursue a high price policy.
- Fertilizer imports are also becoming more expensive due to the falling euro rate.
In the meantime, the courses have reached a level that is no longer supported by increasing developments in the influencing factors. Energy prices have only shown sideways movements in the last few weeks. The doubled freight rate level slows down the demand for transport capacities. Supporting grain prices have lost some of their upward momentum. Last but not least, the price level that has been reached puts off consumer demand. The forward rates for spring 2022 show only minor movements. Surcharges can still be observed in the first few months, but prices decline as the year progresses. With the end of the fertilizing season, even price drops can be seen. The globally reduced production capacities, however, leave a long-lasting supply gap that can last until 2023.The planned capacity increases in some production areas will not change that much for the time being. For the time being, fertilizer prices will remain at the high level that has been reached.
