Polish Fertilizer Prices Face Year-End Pressure as Gas and Urea Costs Surge

Fertilizer prices in Poland are likely to come under renewed upward pressure in the final months of the year, as feedstock costs climb and imports of nitrogen fertilizer from outside the European Union fall to a fraction of last year's level, the Polish agricultural outlet topagrar.pl reported.

Urea has risen by more than 20 percent over the past two months, while TTF natural gas, the European benchmark, has gained more than 65 percent in the same period, according to topagrar.pl. Gas is the main feedstock for nitrogen fertilizer, so higher quotations feed directly into ammonia production costs and from there into urea, ammonium nitrate and the rest of the nitrogen range.

Where Polish prices stand

Urea with an inhibitor averages roughly 2,800 to 3,000 zloty net per tonne on the Polish market, topagrar.pl said, citing the weekly fertilizer price survey it has run for several years covering Poland, the wider European market and global trade. In the most recent week, ammonium nitrate prices moved up by about 180 zloty net per tonne. Phosphate fertilizers also became more expensive, which topagrar.pl attributed to conditions on the sulphur market, a key input in their production.

The outlet stressed that no single variable sets the fertilizer price. The chain runs from raw materials and energy through production, transport and exchange rates to conditions on the world market, with geopolitics sitting on top of it: armed conflicts and transport disruption can restrict the supply of both raw materials and finished fertilizer while raising freight costs. A seemingly small change in one link can end up visible in the price a farmer is quoted at the dealer.

Non-EU imports collapse

The supply side has shifted sharply. In the first seven months of this year Poland brought in 88,900 tonnes of nitrogen fertilizer from countries outside the European Union, against 898,300 tonnes in the same period a year earlier, a decline of about 90 percent, per topagrar.pl. Domestic demand therefore has to be met to a far greater extent from European production, which carries European gas costs.

• Urea: more than 20 percent higher over two months
• TTF gas: more than 65 percent higher over two months
• Urea with inhibitor in Poland: about 2,800 to 3,000 zloty net per tonne
• Ammonium nitrate: up around 180 zloty net per tonne week on week
• Nitrogen fertilizer imports from outside the EU: 88,900 tonnes in January-July versus 898,300 tonnes a year earlier

In a related report, topagrar.pl put Poland's fertilizer trade shortfall at a record 1.76 million tonnes and 551 million euro.

Regulation in the cost stack

Regulatory factors form part of the picture on the European market, topagrar.pl noted, pointing in particular to the EU carbon border adjustment mechanism, known as CBAM, and to changes in the conditions governing fertilizer imports from outside the bloc.

Outlook for November and December

Reporting from the Agroshow farm machinery fair, topagrar.pl's market commentary advised caution about waiting for deep discounts. Over the coming month to six weeks it expects relative stability with only minor price swings. The risk of increases is judged to be clearly greater in November and December, on the combination of expensive gas, rising urea quotations and restricted imports of nitrogen fertilizer from outside the European Union.

The advice to buyers was not to commit the entire requirement at once. Spreading purchases and watching the market remains reasonable, but on the current set of drivers the risk lies on the side of price increases rather than substantial declines, topagrar.pl said. Farmers who know they will need product and can secure it at an acceptable level have little reason, in the outlet's assessment, to wait purely in the hope of a large fall.