Urea prices have fallen by €50/t over the past 12 months, according to UK-based fertiliser nitrogen analyst Christine Gregory.

“Last January Irish farmgate urea prices were in the region of €410/t,” said the Fertecon representative.

“The equivalent price today is in the range €350 to €360. Last January’s prices held for the following six months. But it’s too early to tell if this trend will be repeated in 2016.”

Gregory confirmed that all Irish merchants would have forward bought their 2016 urea stocks three months ago.

“The overall market is determined by supply, demand and currency factors.

There is also a direct link between natural gas prices and urea manufacturing costs.

“But the reality is that urea prices have fallen by as much as they are likely to, irrespective of what happens in relation to natural gas prices over the coming months.

“China has been a major player in the urea market for the past number of years.  But there is evidence that Chinese output levels are now falling, where urea is concerned.”

Gregory said that CAN prices are more likely to respond to changes in the natural gas market over the coming months.

“Most merchants have not taken cover for 2016, where this particular product is concerned. However, one factor that must be considered is the current closure of the OCI plant in the Netherlands.

“This is a facility with a capacity to manufacture 500,000t of CAN annually.”

Natural Gas prices have fallen by approximately 30% over the past three months.

Mark Cryans, head of communications with Fertilizers Europe, confirmed the link between natural gas prices and nitrogen fertiliser manufacturing costs.

“But, as an organisation, we are not in a position to comment on the state of the fertiliser market at any specific time,” he said.

Teagasc on 2016 fertiliser prices

Despite the recent and forecast future reductions in energy prices, a weaker euro means that fertiliser prices in 2016 are forecast to be unchanged relative to 2015, according to Teagasc.

Teagasc says the static prices is down to two countervailing effects.

It had been expected that fertiliser prices would rise in 2015, on the basis of the weakening of the euro versus the US dollar and the fact that the EU is a price taker in terms of fertiliser prices.

In other words, world prices determine EU prices.

However, Teagasc says the fall in oil prices which began to accelerate in early 2015 precipitated a fall in gas prices. Gas is by far the largest cost component of nitrogen-based fertilisers.

So while world fertiliser prices fell in US dollar terms the price reduction in euro terms was minimal due to the weaker value of the euro in 2015, it says.