REDUCED supplies of urea on the other side of the world have compiled to bolster UK nitrogen fertiliser prices by as much as 40-50% since July 2016.

Prices have been affected by the activity of the three global players in the fertiliser market, namely, China, India and the USA, which have reduced their production of urea, leading to worldwide shortage, according to Dave Mitchell, fertiliser manager for Wynnstay.

"China has seen a considerable drop in their own urea production, leading to a swing from exporting £4-£5m tonnes of product last year to possibly becoming an importer this year. This had created an unexpected deficit in their urea supply, contributing to the upwards movement of urea prices.

“The market is also waiting for India to make a second purchase of urea this season, which could equate to as much as 1m tonnes, again putting pressure on overall supply worldwide.

“This pressure has been accentuated by the USA’s lower than expected production volumes. Their overall domestic production of urea will be lower than previously predicted due to delays in opening new plants which means that they will be much more reliant on imports to fulfil any shortfall in product.”

Although these factors have led to an increase in AN prices for growers in the UK, Mr Mitchell highlights that it is worth noting that UK produced AN is competitively priced compared to European product.

He said: “Nitrogen is not as cheap as it has been in recent months. However, in comparison to European AN product, the UK market is steady and providing competitive prices on-farm.”

Latest figures from AHDB Dairy show 34.5% N AN bags in the UK in January were trading at £238-£245 per tonne, which is up from £225-£233 a year ago. Similarly, 46% granular urea in bags was selling at £290-£297/t compared to £224-£232, 12 months previously.