Nitrogen markets remain extremely volatile as geopolitical tensions endure

(Kara Oosterhuis/RealAgriculture)

There’s no doubt that nitrogen prices have seen a steep price increase again as of late. Most of this momentum is being propelled by the current state of the natural gas market.

Sam Taylor, farm input analyst with Rabo AgriFinance, says North American natural gas prices are the highest they’ve been since about 2008.

“What this is doing is forcing European nitrogen production, particularly ammonia production, but it’s not just contained to ammonia, it’s the nitrates, the urea, the UAN — they’re shut down,” he explains. “It’s hard to rationalize why any ammonia would be produced at those kind of gas prices.”

Related podcast: European natural gas first black swan event of 2023 fertilizer market

As you look forward into the pricing dynamics, explains Taylor, you wonder when the production is going to get back up to speed, and what this does for the global balance sheet.

The ongoing war between Russia and Ukraine is going to ultimately determine what happens to the overall price of natural gas, as it is currently being used as a proxy for geopolitics.

“Forecasting [the price of natural gas] is very tricky, because essentially Putin on a spigot could turn off supply to Europe, and that could change the dynamics. It’s hard to imagine they’re going to become lower as we head into the winter months — the key demand months — but you don’t really know any resolution to the Russia and Ukraine conflict that could happen,” Taylor says. “Any increase in flow to Europe could change this dynamic. But it’s hard to be too constructive on the natural gas market and the broader nitrogen complex at present.”

Check out the full conversation between Taylor and RealAgriculture’s Kara Oosterhuis, filmed at Farm Progress Show at Boone, Iowa:

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