THE reality of an Australia totally dependent on imports for its urea supply has hit home this month as wet conditions boost demand for spot supplies.
Growers and resellers have been warned for months by wholesalers to get their orders in for urea needed to fertiliser the winter crop now in the ground, and in a market which now has no local supply following the closure of Australia’s only manufacturing plant, Gibson Island.
The Incitec Pivot Limited facility in Brisbane was not able to secure an affordable long-term supply of gas from Australian producers, and after 50 years of operation, closed in December.
In the meantime, cargoes from manufacturing plants around the world are being relied upon to supply the Australian growers’ needs.
These needs have exceeded expectations, as average or above-average rainfall over much of southern Australia since planting started in April goes against the current El Niño Alert status.
One major reseller has outlined the situation.
“Suppliers, retailers, and growers were closely monitoring the imminent threat of dry weather that was consistently reported,” the source said.
“The weather conditions have not taken a turn as expected.”
The source said growers who maintained regular communication with their retailers to forecast their urea application were sitting pretty.
“However, those who were caught off guard will face extended delays, as the arrival of urea shipments is not expected until late July or even August, possibly leading to a late arrival on farms.”
As many growers ponder the wisdom of hindsight, and potential lost yield, the source said three factors have gone against the grower this season.
“The current circumstances represent a perfect storm characterised by unpredictable weather patterns, short-term scarcity of supply, and softening urea prices.”
In a statement, an Incitec Pivot Fertilisers spokesperson said the company had an Australian supply of fertiliser from its existing ammonium phosphate plant in Queensland and its single superphosphate plant in Victoria.
“Incitec Pivot Fertilisers has been, and will continue to, procure urea from several large, reputable producers across a number of regions to ensure continuity of supply for its customers,” the spokesperson said.
The spokesperson referenced Incitec Pivot’s offtake arrangement with the Perdaman plant under construction in Western Australia which s expected to be putting urea into the domestic market by 2027.
Sources report WA is not experiencing the same kind of spot shortage of urea as eastern states and South Australia.
Hopes for softer prices limit bookings
Fertilizer Australia executive manager Stephen Annells said many growers have been “caught on the hop” by the season being kinder than expected to date in many districts, and by the falling market.
Fertilizer Australia represents distributors and importers as well as manufacturers.
“My members have said a high proportion of growers have contracted, and the ones that haven’t have been caught out by market tightness,” Mr Annells said.
“Growers were also holding off contracting, and anticipating lower costs.”
Urea is offered to growers at around $650/t delivered, less than half the market peak seen early last year.
One Fertilizer Australia member told Grain Central some growers wanted further price drops before they would book loads.
“The customers, regulars and new inquiry, have been saying: ‘The price is coming down, I’ll wait for a $10/t drop on a $700/t product’,” the member source said.
“I don’t think a lot of them knew domestic production stopped, and it’s a long time until WA opens.”
Australia sources most of its urea from the Middle East and Asia.
Mr Annells said globally, urea sales have been “going gangbusters” in the falling market and in the face of strong demand, and overdue and scheduled maintenance shutdowns have further tightened near-term global supplies.
Mr Annells refuted claims that vessels booked to unload in Brisbane and Newcastle have been diverted to southern ports.
“I’ve heard nothing of that; I believe they’ve put vessels where the demand is.”
Impact of changing practises
Nutrien Ag Narrabri agronomist Dylan Verrier said indications were that urea would not be available until the third week of August, a significant change to the way loads have been supplied in winters past.
“You used to be able to order one today and get one tomorrow,” Mr Verrier said.
In light of boggy conditions in recent wet years, Mr Verrier said his clients have adapted their urea programs because in-crop application became difficult or impossible at the ideal time.
While the north-west plains of NSW, including districts west of Narrabri and across the border into south-west Queensland, is the one region of Australia where El Niño seems most likely to show up this year, the adjustment has paid off in this dry year.
“My blokes used to spread in-crop and I’ve got them away from that.
“Most of my blokes have all their urea on up front for an average year.”
That means factoring in a yield of 3t/ha, as over-fertilising in a low-rainfall season can cause too much tillering for the amount of grain the plant can produce.
However, sufficient rain means growers can be looking for urea to top dress and chase yields of around 6t/ha.
At Goondiwindi, MCA Agronomy Service director Paul Gardoll said some clients were looking for a production boost by top-dressing with urea.
“Two weeks ago it was very easy to get, and last week it got difficult,” Mr Gardoll said.
While precision agriculture matches crop nutrition to plant-available water, it relies on inputs being available to the grower, and conditions in the paddock being conducive to application, to maximise yield potential.
“That’s precision ag: if you miss one bit, it falls in a heap.
“There’s probably been a lot of movement towards in-crop application; because of that, this time of year is important for urea supply.”
“Previously, say 10 or 15 years ago, a lot was applied in Jan-Feb.”
“It’s a little bit concerning now, but the real time (of concern) will be the end of July through to the end of August if there’s a rain front.”
Mr Gardoll said the region’s drought years of 2017 to 2019, followed by COVID disruptions to the supply chain, have reshaped ideas about stocks and ordering.
“Since 2016, resellers don’t want to stock too much.”
“Everything used to be available readily; I think we’re getting into an environment now where …we’ve got to really plan.
“If there’s not much planning, there will be shortages.”
“The good operators know they have to have some in store.”
Mr Gardoll said higher-yielding varieties were hungrier than their predecessors and, coupled with the Gibson Island closure, under-ordering by growers has become an easy mistake for growers to make.
“With the high yields of the past few years, we know 50 tonnes of urea doesn’t go as far as it used to.
“In the past two months, the focus has been on getting the crop planted, and we mightn’t have been giving the best signals to the market that we needed it.”
Crops from around Narrabri to Surat and east are seen as having average, or in some case better, yield potential, while vast tracts of northern NSW remain fallow due to dry conditions, or have well below-average yield potential.
“If you went around the grounds today…from my client base, a quarter would say (El Niño) is already here, and a quarter would say they haven’t had a better start.
“Some have had to replant…and are saying ‘right-o, we’ve had enough’ on inputs.”
In parts of southern Queensland, some growers had 60-70mm in late May.
“They are saying El Niño hasn’t hit at all.
“We’re in no-man’s land; a couple of rainfall events and it could be a red hot year. “
Brighter in WA
CSBP Fertilisers is one of WA’s major urea suppliers, and in a statement today, company general manager Mark Scatena said CSBP was “in the market” to supply fertiliser nitrogen in 2023.
“In recent weeks, our team has experienced an increase in the number of inbound calls from growers who have not traditionally looked to CSBP for their in-season nitrogen supply,” Mr Scatena said.
“While commentary suggests that some market participants have scaled-back programs or withdrawn from the market due to volatile market conditions, CSBP’s ability to ‘look through’ short-term factors has positioned us well to meet the fertiliser nitrogen requirements of growers this season.”
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