For many years, fertiliser purchasing has largely been a question of price. Watch the market, monitor gas, follow urea, compare offers then decide whether to buy now or wait.
But the events of recent years have changed the equation. The fertiliser market is becoming increasingly shaped by something farmers cannot control, geopolitics.
The war in Ukraine continues to influence the availability and movement of Russian fertiliser and raw materials. Now, disruption arising from the conflict involving the US and Iran has created another major shock to global fertiliser supply chains, particularly across the Gulf and through the Strait of Hormuz.
For UK agriculture, the important point is not simply that fertiliser prices have risen. It is that the route by which fertiliser reaches the UK has become less predictable.
Fertiliser is a global market, it is easy to think of fertiliser as a relatively straightforward product. A manufacturer produces it, a merchant buys it, and it eventually arrives on farm.
In reality, the journey can involve natural gas, ammonia, urea production, international shipping, ports, storage terminals, blending and bagging facilities, road haulage and a series of international trading decisions.
A disruption at almost any point can change the economics of the entire chain. That is particularly important for nitrogen. Natural gas is a fundamental input into ammonia production, while ammonia sits at the heart of the production of many nitrogen fertilisers. This means that an energy shock in one part of the world can quickly become a fertiliser shock somewhere else.
The current situation in the Middle East has demonstrated this very clearly. The Strait of Hormuz is not simply an oil shipping route. It is also an important corridor for global fertiliser trade, with significant volumes of urea, ammonia, phosphates and sulphur normally moving through the region.
When that route is disrupted, the consequences extend well beyond the countries directly involved. One disruption creates another! The real challenge is what happens next…
When a major source of supply becomes uncertain, buyers do not simply stop buying fertiliser.
They look elsewhere.
- A Brazilian buyer may compete for North African urea.
- A US buyer may look towards alternative origins.
- European buyers may compete for cargoes that would previously have moved into other markets.
Suddenly, a problem thousands of miles away can change the price and availability of a fertiliser shipment destined for the UK.
This is why watching only the UK market can sometimes give a misleading picture. The UK is part of a much larger global market, and fertiliser will continue to move towards whichever market is offering the strongest combination of price, freight economics and security of payment. The world has already seen this happen, the fertiliser market experienced a major supply shock following Russia’s invasion of Ukraine.
European production was hit by extremely high natural gas costs, while trade flows involving Russia and Belarus became more complicated because of sanctions, restrictions and changing buying behaviour.
The result was not simply a shortage of Russian fertiliser. It was a restructuring of global trade. That experience is relevant again today. The OECD (Organisation for Economic Co-operation and Development) has highlighted how the lingering effects of the Russia-Ukraine war have reduced European fertiliser production and Russian ammonia exports, while disruption in the Gulf has created additional pressure on global fertiliser markets.
The important lesson is that fertiliser supply does not have to disappear completely for the market to become tight. It only needs to become less certain. From Hormuz to NOLA, Brazil and North Africa. One of the clearest indications of how interconnected the market has become is the way price movements have spread between regions.
Recent market analysis has shown significant movement in North African urea, while Brazil and NOLA have also responded to changes in global supply expectations. This matters because these markets compete for the same underlying tonnes. If North African producers can achieve a stronger netback by selling into Brazil, those tonnes may no longer be available to European buyers.
If US demand pulls additional product into North America, replacement cargoes have to come from somewhere else. If shipping through a key trade route becomes difficult or expensive, the cost of moving alternative tonnes increases. The fertiliser market therefore has a domino effect. One disruption can change the value of product hundreds or thousands of miles away.
Availability is becoming as important as price! This is perhaps the biggest change in the way farmers need to think about fertiliser purchasing. Historically, a farmer could reasonably think “I’ll wait and see where the market goes.”
That strategy may still work in some circumstances. But there is a difference between waiting for a better price and waiting for a product that may not be available when you need it. The AHDB has highlighted this distinction in its latest assessment of the UK market. The issue is not simply whether fertiliser exists somewhere in the world. It has to be imported, manufactured, stored, processed, bagged, loaded and delivered – all within the required timeframe.
Every stage has finite capacity.
- There are only so many vessels.
- Only so much storage.
- Only so many blending and bagging facilities.
- And only so many trucks and drivers available to deliver fertiliser during the spring application window.
That means a supply chain can become constrained even when there is technically plenty of fertiliser somewhere in the global market. The UK cannot simply switch origins overnight.
Another misconception is that if one origin becomes unavailable, another can immediately replace it. It isn’t quite that simple, different fertilisers come from different production bases. Different origins have different freight economics, some products require different handling or blending arrangements, and competing markets may already have secured available cargoes.
The result is that replacement supply can take time – and it can come at a significantly different price. This is particularly relevant for nitrogen, but the same principle applies across phosphate, potash and sulphur markets.
The global fertiliser system is interconnected. What does this mean for UK farmers?
It does not mean that farmers should panic-buy fertiliser. Nor does it mean that today’s price will necessarily be tomorrow’s price. Nobody can predict the next geopolitical development, the next vessel disruption or the next major purchasing tender with certainty.
What it does mean is that fertiliser purchasing needs to become more strategic.
Rather than asking only “Is the price going up or down?”
There are several other questions worth asking…
- Is the product actually available?
- Where is it coming from?
- How secure is that supply?
- How long will it take to reach the UK?
- What happens if another major market starts competing for the same tonnes?
- Can it be delivered when the farm actually needs it?
These questions are increasingly important when planning the 2027 fertiliser requirement.
Don’t just manage price risk – manage supply risk!!
There is an important distinction between the two.
Price risk is the risk of buying today and seeing the market fall tomorrow.
Supply risk is the risk of waiting for a better price and finding that the product you want is no longer readily available, or can’t be delivered when you need it.
Neither approach is risk-free. The objective should therefore not necessarily be to pick the perfect day to buy. It should be to build a purchasing strategy that gives the business options. That could mean spreading purchases across different periods, securing core requirements ahead of the season, using different product forms where appropriate, or working closely with a supplier to understand what is physically available rather than simply looking at an indicative market price.
The market may be volatile. Your strategy doesn’t have to be. There is no shortage of uncertainty going into the next fertiliser season. Geopolitical tensions remain a significant influence on energy and fertiliser markets. European production economics remain closely linked to gas prices. Global buyers continue to compete for available tonnes, while changes to trade policy and regulation add another layer of complexity.
UK fertiliser prices have already demonstrated just how quickly sentiment can change. AHDB’s September market update showed UK ammonium nitrate and granular urea prices still materially above pre-conflict levels, despite some easing from the peaks seen earlier in the year. Trying to predict every move is therefore unlikely to be the most productive strategy. Understanding the market is.
A different way of looking at 2027
The fertiliser market has always carried risk. What has changed is the nature of that risk. It is no longer just about commodity cycles and natural gas. It is about wars, sanctions, shipping routes, energy security, trade policy, production economics and competing demand from every major agricultural market in the world.
For UK farmers, that means fertiliser planning should be about more than securing a price.
It should be about securing the right product, from a reliable supply chain, at the right time for the crop. The farmer who understands where their fertiliser is coming from, and what could disrupt that journey – is in a much stronger position to manage whatever the market does next.
Because in today’s fertiliser market, knowing the price is only half the story.
Knowing whether the fertiliser will be there when you need it could be just as important.
