Fertilizer Prices Are Getting More Expensive in Europe, Adding to Food-Inflation Concerns
(Bloomberg) -- Fertilizer in Europe is poised to get even pricier, adding to concerns that bigger production costs for food could add to inflation.
A gauge of western European prices for ammonia, used to make nitrogen fertilizer, surged to a 13-year high to $910 a metric ton.
Europe has been hard hit by the natural gas crunch, which has forced a number of nitrogen-fertilizer plants to halt or curtail production, including the likes of Norway’s Yara International ASA and top European chemicals company BASF SE. The gas makes up 80% of the cost to produce the nutrients and prices are four to five times higher than normal, according to industry group Fertilizers Europe.
Local farmers are already fretting about securing enough supplies for the spring. Any scarcity risks curbing grain yields and quality in the European Union, the world’s biggest wheat exporter and a major barley supplier. Any drops in output could add to concerns about rising food prices.
Corn prices have been rebounding over $5.50 a bushel, well over the five-year average around $4.34.
A benchmark North American fertilizer price index rose 0.4% to $1,017.87 per short ton Friday, still teetering close to a record reached earlier this month.
Farmers in the U.S. have pulled back slightly on fall fertilizer use, and retailers are now only buying what they need for the immediate future, said Alexis Maxwell, an analyst at Green Markets, a business owned by Bloomberg. The rush to buy fertilizer for the spring won’t come until around February.
“So now we wait and see,” Maxwell said. “Do rest of the world prices fall to meet the U.S., or does the U.S. eventually jump up to meet the rest of the world?”
©2021 Bloomberg L.P.