Recent price hikes in the gas market have been well documented with knock on effects for commodities which rely heavily on natural gas like fertiliser production.

The flurry of post-lockdown economic recovery has led to soaring gas prices as supply has struggled to keep pace with demand.  Last summer bore witness to unprecedented gas price rises which prompted a temporary hiatus in fertiliser production across Europe in the early Autumn resulting in a shortage of stock, which the market is still struggling to recover from.

External influences in the market are also placing additional pressures on product availability.  The Chinese export ban was instigated to protect tight domestic supplies resulting from the closure of many of their coal fired production plants.  Meanwhile, Russia has imposed export quotas on certain compounds with the risk of a ban looming if the geopolitical instability of the Russian Ukraine situation escalates.   As a result, traditional customers for both of these markets are now being forced to source elsewhere, placing additional pressure on the European market in particular, and with global fertiliser supplies having tightened considerably, cargoes are becoming more difficult to obtain.

The issue of working capital presents an additional challenge to the supply chain as the cost of financing fertiliser is now 2.5 times greater than last year.  It is also forecast that strong gas prices are anticipated to last into the summer months and through to next winter.

Whilst stocks of fertiliser appear to be adequate for this quarter, spring demand could be the pinch point that results in supplies being depleted and a battle to replenish in time.

As a result, routine soil testing is now more important than ever and reports are suggesting that farmers are paying closer attention to the pH of their soils and investing in lime.  This is essential to maximize the nutrient use efficiency of the fertiliser that is applied as sub-optimal soils can limit both yields and quality.  As nutrient balance is the key to success, the temptation to over or under supply certain nutrients should be avoided as this will not be economically beneficial in the long run.