Both Ravensdown and Ballance informed their shareholders on June 26 of the new prices, with both lifting urea to $669-$799.
Global urea prices had jumped US$190/t higher than Ballance’s average price since January 2016.
In a message to its shareholders, Ballance general manager of sales Jason Minkhorst said demand for produce from international cropping farmers had driven up nitrogen and phosphate prices.
“Coupled with this, the cost of gas and coal to produce ammonium is increasing, which leads to the highest global urea price in 10 years,” Minkhorst said.
“There are a combination of factors impacting the global supply and demand for fertiliser. Worldwide food prices are increasing and this flows on to high demand for fertiliser globally. The benefit of being a co-operative is that we can use our buying power to ensure security of supply going into spring.
“We acknowledge that the recent fertiliser price increases are significant, however, we needed to increase the prices in order to be able to cover the cost of new shipments.”
Ballance’s other product range has experienced similar lifts.
SustaiN has jumped from $726-$855; Nrich SOA has gone from $409-$499; Super 10 has gone from $319-$399; SurePhos increased from $334-$354; MOP lifted from $690-$755; and DAP jumped from $988-$1055.
Similarly, Ravensdown cited the drastic increase in European gas prices and coal prices, along with the outlook for high crop prices and high freight rates as the reasons for the increase.
“Global urea prices are currently USD190/t higher than the average price over the past five years. This is due to a drastic increase in European gas prices and coal prices, along with the outlook for high crop prices and high freight rates,” it said in an email to shareholders.
It said there had been two big market drivers that have caused a change in forecast for DAP prices since April. These were high crop prices in Brazil, driven by adverse weather conditions and the Indian government issued a large subsidy to its farmers, making DAP more affordable for farmers in this market, which has driven demand.
EU sanctions on Belarus exports helped push up its price of MOP (potash) by $100 to $790. Its price of triple super sustained the biggest lift, jumping $177 to $867.
Ravensdown customer relationships general manager Bryan Inch says demand has climbed sharply on the back of rampant international demand. Strong crop and grain prices in Brazil and India meant farmers are maximising production.
“India alone purchases over 11 million tonnes of urea each year. Fertiliser prices have been escalating from a relatively low base (with respect to 10-year averages),” Inch said.
Ravensdown general manager supply chain Mike Whitty says the sheer scale of the increases had been significant across the board.
“You always see some volatility in commodities, but we haven’t seen it at these sorts of levels for a decade now,” Whitty said.
International grain prices are extremely strong after rebounding from last year when covid-19 caused many economies to be depressed.
He says the economics around production and fertiliser usage was now very positive.
The inventory for grain fell over the past few years and there was quite a demand to build those inventories back up again.
“This year is looking really positive. Low inventories of grain and very good pricing and that’s led to demand for nutrients to grow the food,” he said.
Shipping infrastructure was struggling to keep up with that demand, leading to significant cost increases.
Anything being shipped by container had become more problematic in the past few months and he expected it to continue to be a challenge. Bulk shipping was less of an issue, but ports were nearing capacity, which added to the challenge of shipping.
“Generally, it’s becoming more challenging and supply is becoming more constrained just because of the sheer demand. We have really looked to bring forward our programme to make sure we’re not impacted, but we are reliant on the international supply chain,” he said.
Being a cyclical commodity, he expected a correction to take place at some point in time.
“The short-term is looking reasonably firm but looking historically when you see very significant increases, you tend to see a right sizing of that at some point,” he said.
