Volga Baikal AGRO News Update on the FERTILIZER PRICES in RUSSIA !!!
FERTILIZER PRICES IN RUSSIA CAN BE FIXED UNTIL MAY 2022
The government can freeze the increase in prices for mineral fertilizers at least for the spring sowing season of 2022. This scenario was discussed on October 25 at a meeting with Prime Minister Mikhail Mishustin on measures to support the agricultural industry. One of the options discussed is the extension of fixing prices for ammonium nitrate until May 2022 ” with priority and guarantee of supplies to the Russian regions.”
Now is the season for concluding contracts for the supply of nitrogen fertilizers for the spring sowing of grain. But it is not yet clear what the prices for the products will be. The solution to the issue may be the conclusion of agreements between suppliers of nitrogen fertilizers with regional administrations, which will guarantee the supply of certain volumes for spring field work.
In any case, the decision taken should guarantee the availability of fertilizers on the domestic market, and on the other hand, preserve the competitiveness and export opportunities of Russian producers.
Now world prices for fertilizers are at multi-year highs: the cost of nitrogen and phosphorus fertilizers reaches $ 800-1000 per 1 ton, depending on the port of shipment. The production of nitrogen fertilizers in Europe decreased due to high gas prices (up to 20% of capacity was stopped), which, combined with the lag in the commissioning of new capacities with steadily growing demand, led to a sharp increase in prices.
Prices for phosphate and potash fertilizers have also increased and the high price level will continue in 2022. The Argus review of October 25 notes that nitrogen fertilizers, especially ammonium nitrate, are becoming more expensive. Quotations of this fertilizer in the Baltic ports on average increased by almost $ 74 per 1 ton compared to the previous week. Russian saltpeter producers who ship the product from the Baltic Sea region, for example, to Latin America, have few available volumes due to active demand in the domestic market, Argus analysts write.
According to M. Burmistrov, CEO of Infoline-Analytics, the best way to regulate the market would be to maintain the priority order of supplies to the domestic market and fix prices with possible local indexing of domestic prices for fertilizers. Restricting exports does not look like a logical measure, and even its active discussion can have an extremely negative impact on the situation in the industry, the expert notes.