World prices for mineral fertilizers began to fall, but in Ukraine they remain high due to the devaluation of the hryvnia

World prices for mineral fertilizers after reaching their peak values in November – December 2021 began to gradually decline, but still exceed the level of the beginning of 2021, the latifundist publication reports.

So, at the beginning of 2021, urea prices did not exceed 2 280/ton, and on November 19 they reached 9 934/ton against the background of a sharp increase in gas prices.

Andrey Sizov, director of the SovEcon analytical center, names several reasons for the fall in prices. The first is a reduction in the cost of gas in Europe, which fell by half compared to November, which allowed ammonia producers to increase production volumes. In particular, in September – November, the Norwegian company Yara, which is the largest European producer of mineral fertilizers, reduced ammonia production by 30% due to a seven-fold increase in gas prices.

Against the background of a further decline in gas prices, prices for mineral fertilizers will continue to fall. In addition, agricultural producers in the Northern Hemisphere have already partially purchased the necessary volumes of fertilizers and can wait for the purchase. Against this background, the United States is now experiencing a collapse in prices on the physical market, " A. Sizov said.

However, if gas prices rise to a level where the cost of fertilizers will not compensate for the costs of producers, the possibility of a second reduction in production is not excluded.

Against the background of lower gas prices in Europe, buyers expected a reduction in the cost of nitrogen fertilizers, but this did not happen, so experts consider the impact of gas prices on operational fertilizer prices to be overestimated. At the same time, the devaluation of the hryvnia is called one of the reasons for their rise in price. The hryvnia exchange rate directly affects the prices of imported fertilizers and raw materials for domestic chemists.

As of January 12, 2022, fertilizer prices in Ukraine have remained almost unchanged, and prices for urea and UAC have even increased. However, analysts attribute this to the rise in price by reducing offers in the lower price corridor of products.