Fertilizer values remain highly volatile as markets digest ongoing disruptions to Russian natural gas entering Europe.
According to the Green Markets North American Fertilizer Price Index, prices of the product in North America rose 11% week-on-week as of Friday, 2 September. It ended the week at $982.63.
Fertilizer prices remain off the highs of $1,270.40 hit in late March. But they’re back on the charge following Russia’s decision to cut off natural gas supplies to Europe.
What’s Happening With Russia?
Natural gas prices jumped again on Friday after Gazprom cut supplies from the key Nord Stream 1 pipeline into Europe. The state-owned Russian company said that the stoppage was caused by a leak that required repair.And prices have risen further on Monday as Russia claimed the pipeline would not restart until sanctions are lifted. Kremlin spokesman Dmitry Peskov has said that sanctions slapped on Russia following the country’s invasion of Ukraine this year have caused a problem with pumping at Nord Stream 1.
On Monday natural gas for delivery next month was recently trading at 450p per therm. This was up around 10% on the day.
Nitrogen-based fertilizers are by some distance the most widely used. And a key component of these products is ammonia, a compound which requires huge amounts of natural gas to produce.
Because of this dynamic, and the uptick in gas prices in 2022, Jacob Hansen, director-general of trade body Fertilizers Europe, told Euronews in May that natural gas accounts for “90% of the variable costs in fertilizer production.”
Major fertilizer producers in Europe are continuing to shutter operations in response to soaring energy costs.
Poland’s Grupa Azoty and PKN Orlen, for example, announced plans to stop producing nitrogen-based fertilizers late last month.
In Britain, CF Fertilisers UK — which in late August said it was also halting ammonia production — stopped producing fertilizer back in September 2021.
Rocketing natural gas prices aren’t the only reason why fertilizer prices are soaring, though. Supply disruptions from Russia and Eastern Europe following the outbreak of the Ukraine conflict are also having an effect. Restrictions on Chinese exports meanwhile are exacerbating the shortage of supply.
Rising food prices are also contributi