Russia produces 2/3 of the World’s ammonium nitrate, which is the main fertiliser that farmers use for crops, grass and livestock farming. Half of the World’s population gets their food as a result of these fertilisers.
The price has soared from £200 per tonne to £1000 per tonne over the last couple of years. Russia had already placed a ban on all exports on this from 1st February.
The UK feed wheat futures (May-22) rose for the sixth consecutive session yesterday, up £18.00/t to close at a record £303.00/t. However, only 150 contracts were traded during the day, the lowest traded daily volume since 17 February 2022 (Refinitiv). New crop (Nov-22) also rose (£11.00/t) from Friday’s close to £249.00/t, a contract high.
Markets are said to have paused while traders wait to see the outcome of several international tenders this week. These will allow greater insight into the price and availability of wheat.
Oil and gas prices have already risen with approximately 30% of European oil and 39% of gas sourced from Russia, the knock-on effect will be felt everywhere. Despite the Black Sea supply turmoil, improving conditions in Argentina have removed a bit of the heat.
This increased uncertainty to global supply, when the outlook was already tight before the conflict began, is adding additional support to surging oil prices. And this is being felt here in the UK at the pumps.
Equally, with gas prices soaring and availability restrictions being threatened, there is no let-up on the horizon for fertiliser prices. Even for those UK growers who are covered for this season, it would be mindful to think ahead to 2022/23 and the potential cost of replacing supplies should the war in Ukraine continue for some time.
We will continue to monitor the situation from our perspective and report on the direct effects it may have on your business.