Urea prices set to rise to $800 a tonne due to global demand

Cropping farmers could be forced to pay $800 a tonne for urea, right on the cusp of winter sowing.

Urea prices are expected to rise above $800 per tonne (port basis) within the next seven to 10 days, driven by overseas economic headwinds.

While farmers have started winter sowing, traders and merchandise specialists say the price increase is more likely to affect the second application of urea after crop emergence.

Southern Grain Storage director Campbell Brumby said urea was currently priced at $780 a tonne but he anticipated that to rise to $800 a tonne in the short term.

“World pricing has firmed by US$20 a tonne already,” he said.

Mr Brumby said urea was the most volatile fertiliser from a pricing point of view and it always fluctuated.

However, he didn’t foresee any overall shortage or signals that urea would go as high as it did in 2022 when prices shot to more than $1200 a tonne.

Mr Brumby said farmers had urea on hand for sowing. The price increase was more likely to affect applications throughout the growing season once the crop had emerged.

“In Victoria, we are not at a full moisture profile at the moment, and there are drier conditions, but there has been a good season in the north,” he said.

Goorambat farmer Greg Gall is preparing for winter sowing. Picture: Yuri Kouzmin

GrainGrowers advocacy and rural affairs manager Sean Cole said the cost of natural gas on the world market had been increasing and that was a profit driver for urea.

Natural gas is an important raw mineral in making urea, so the cost of natural gas and urea correlates closely.

“In North America and Europe, there have been cold winters and natural gas prices are affected with reserves lower,” he said.

Mr Cole said demand for urea for the upcoming season was mixed with northern NSW and Queensland receiving rain and having a positive start.

However, conditions remained dry throughout southern NSW, parts of Victoria, and much of South Australia.

Mr Cole said GrainGrowers was hearing of a price rise for urea to about the $800 a tonne, but he didn’t believe there was any foul play in the market; rather, it was supply and demand metrics.

Goorambat cropping farmer Greg Gall said he had already started putting urea down and would apply it during sowing.

He said the region received a total of 30mm of rain about two weeks ago, followed by another 12mm over the weekend, which helped with confidence for sowing.

Mr Gall said urea for his property - where they planned to sow wheat, canola, beans, lentils and vetch - was already sourced and on hand but farmers would certainly be keeping an eye on prices.

Ron Gardiner of Delta at Dubbo, NSW said urea pricing was always difficult to predict.

However, due to rainfall in his area and to the north, demand had been strong.

“Rain always dictates what demand we will see locally,” he said.