Grupa Azoty on the situation on the fertilizer market

– The last six months on the domestic fertilizer market for producers, trading companies and farmers is an unprecedented period in the history of the Agro supply market. The high levels and record volatility of the prices of the main raw materials for the production of fertilizers, i.e. natural gas, phosphate rock and potassium salt, have created an unprecedented, rapid increase in production costs and, consequently, the level of fertilizer sales prices, the Grupa Azoty Group announced in a press release.

As the company reminds, the beginning of the fourth quarter of this year is a slight stabilization of gas prices, unfortunately at a very high level – approx. EUR 90 / MWh (in the corresponding period of 2020, the gas price was approx. EUR 14 / MWh).

– This situation partially stabilized the market, allowing Grupa Azoty to extend the duration of its commercial offers to one month. In response to market signals about the unavailability of selected fertilizer formulas on the domestic market, Grupa Azoty limited the execution of fertilizer export transactions in order to ensure the availability of fertilizers for Polish farmers. These activities, combined with full commitment to optimizing the commercial terms of authorized distributors, also resulted in the stabilization of the selling prices of fertilizers from the Grupa Azoty Group’s offer, it was informed.

Shipping duty investigation on fertilizers

High fertilizer prices. What’s next?

In the opinion of Grupa Azoty, the coming weeks will be decisive for the proper course of spring field work among domestic agricultural producers. Their purchasing decisions concerning securing the required quantitative level of means of production, especially fertilizers, will have a direct impact on the efficiency of the conducted production farms in the new season. In the current period, an in-depth analysis of the national balance is a key element determining the correct assessment of the situation when purchasing fertilizers by farmers. fertilizer market.

– The Grupa Azoty Group, despite the very difficult cost situation, maintained the continuity of production at its installations, unlike foreign competition, which in most fertilizer factories in Europe either suspended production or significantly limited it. The authorized distribution network of Grupa Azoty’s fertilizers has a full range of fertilizers in its retail outlets, meeting the expectations of domestic customers. At the same time, the Polish market has significantly limited access to fertilizers by import competition, which in the first place makes up for the arrears in supplying the nearest markets, focusing on securing domestic agricultural producers. The persistently much higher prices of fertilizers on European markets will continue to reduce deliveries in the coming months to their export markets, including to Poland – we read in the release.

Can there be a shortage of fertilizers?

According to the company’s representatives, the period in which we currently find ourselves has an impact on the fertilizer supply as well. The coming winter will most likely contribute to further increases in the prices of the main energy resources such as gas, electricity, coal and fuels, which will be associated with an increase in demand for these raw materials by households and industry. This situation may result in further increases in the prices of final products, including fertilizers.

– This is one of the reasons why the Grupa Azoty Group has been convincing farmers for many years to supply the key production means, such as fertilizers, in several annual installments, which ensures an increase in the operational safety of the farm through the possibility of averaging purchase prices and the gradual collection of the necessary amounts of fertilizers to ensure continuity and efficiency of own production – stated.

– We constantly analyze the level of supplying farms with means of production, e.g. fertilizers and we observe that currently a large part of domestic farms do not have security for the first, spring fertilizer dose – says Piotr Zarosiński, Director of the Corporate Trade Department of the Agro Segment of Grupa Azoty.

The Grupa Azoty Group announced that taking into account the period in which we are now and the probable scenarios of further restrictions in the availability of fertilizers, e.g. as a result of:

– Russia’s decision to reduce the amount of fertilizers intended for export in the period from 01/12/2021 to 31/05/2022,

– very high interest in export markets in fertilizers from Poland due to the lower price of domestic fertilizers compared to foreign fertilizers (export pressure),

– continuing shutdown or reduction of production levels in many European fertilizer factories (in case of starting production, it is not possible to make up for unproduced amounts of fertilizers during shutdowns of production installations in Europe – production to meet the needs of domestic markets),

– unstable situation on the commodity markets.

The Grupa Azoty Group recommends not to delay the supply of fertilizers.

– In the current reality, each farmer acts as an efficient manager, preceding production decisions with a detailed analysis. He treats the farm area as his own production and trade company for which the priorities are safety and efficiency of operation. There should be no room for speculation in a stable business. Currently, this element unfortunately constitutes a significant share in the processes of supplying means of production in some farms in Poland. Unfortunately, this will most likely have a negative impact on the achieved production results in 2022 and further operation in the future. In the current situation, postponing fertilizer purchases to the period just before their application is a risky decision, which may result in supply problems in the spring, continues Piotr Zarosiński.

The fertilizer market is at a bend

In the opinion of Grupa Azoty, the ongoing assessment of the market situation should encourage immediate planning and implementation of fertilizer supplies for spring application.

– Most of the possible threats are already defined today, but additionally, it should be remembered that it is not possible to ensure full availability of fertilizers in the short term due to e.g. transport, storage and financial limitations that may occur when purchasing processes are left at the last minute. One should also not forget about the possible earlier possibility of using nitrogen fertilizers due to unfavorable weather conditions, which already took place in spring 2019, when an earlier application of nitrogen fertilizers was agreed, accelerated by 2 weeks – the company informed.

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About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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