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Fertilizer Market Report – October 23, 2024
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In this week’s fertilizer report: Fertilizer Producers Continue to Struggle in Europe; McKinsey & Company: Global Farmer Insights 2024; Last Week’s North American Urea and Phosphate Action; and Other Industry Tidbits.
Fertilizer Producers Continue to Struggle in Europe
Interesting strategy adopted by Yara in Europe as one of its ammonia plants struggles with profitability due to high and volatile energy prices. This certainly supports the Genesis Fertilizers business model which will see an ammonia plant built in a low input cost area in Western Canada utilizing low-carbon technology.
The management of Yara Tertre has informed workers representatives of Yara’s intention to transform the site. The proposed transformation would entail closure of the ammonia unit and shifting production towards the site’s most competitive products, premium nitrate fertilizers and industrial nitrogen chemicals.
Yara Tertre is facing challenging market conditions, in combination with high and volatile energy prices and high maintenance costs, resulting in prolonged financial distress over recent years. In addition, more stringent environmental regulations and the need to accelerate decarbonization are increasing the pressure on Tertre’s ammonia production.
“In order to achieve a long-term, profitable and sustainable business, while securing high-quality jobs, we need to consider making fundamental changes. These envisioned changes would enable us to continue serving our European customers and prepare for the decarbonization of the site. Strengthening the competitiveness and profitability of Yara’s premium products while positioning for decarbonization would be in line with Yara’s strategy,” said Michel Warzée, General Manager of the Yara Tertre site.
Yara intends to transform Tertre plant to strengthen long-term competitiveness
McKinsey & Company: Global Farmer Insights 2024
Farmers are increasingly prioritizing productivity. A shift toward operations-focused solutions underscores a broader trend in agriculture, where efficiency and sustainability are becoming paramount.
Farmers cite increased price of inputs, extreme weather events, and volatile commodity prices as the top three risks to profitability in the next two years. Having input prices and extreme weather events as the top two risks is consistent with our 2022 survey, but the gap between the two has closed considerably, given that farmers have experienced a greater number of extreme weather events (only seven percentage points now separate the two risks). Volatile commodity prices are a newly added risk not previously included in our survey. Input prices remain the top concern, with 48 percent of farmers noting price increases as the main risk to profits, compared with 63 percent in 2022. Despite a general decrease in costs for fertilizer and the active ingredients for crop protection over the past year, farmers report an average perceived increase in overall costs of 13 percent in the same time frame. They continue to worry about the price of inputs such as fertilizer, which has the highest perceived inflation in the past 12 months: 24 percent of growers reported that prices have risen more than 20 percent in the past year. Perceived increases in labor (14 percent) and crop protection (13 percent) costs follow.
McKinsey & Company Global Farmer Insights | READ MORE>>
North America Urea Last Week
According to Green Markets, urea prices in Western Canada jumped WoW to a range of C$680-$700/mt from C$650-$655/mt where it sat the previous three weeks.
Last week, the NOLA urea price range fell slightly to US$325-$333/st from US$330-$334/st the previous week.
Urea Middle East was up 6% on average to US$390/mt as the conflict continued.
According to Direct Hedge, the week started with urea Nola spreads of US$325/st bid and US$330/st offer for October. November was quoted at US$330/st bid and US$335/st offer. December was US$335/st bid and $340/st offer and Q1 was US$340/st bid and US$350/st offer.
North America Phosphate Last Week
According to Green Markets, the latest delivered Western Canada MAP prices were up WoW to a range of C$1,120-$1,160/mt from C$1,090-$1,105/mt where it was priced the previous three weeks. MAP supply remains tight across North America.
MAP NOLA prices were flat WoW in a range of US$615-$625/st.
Industry Tidbits
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