Fertiliser fears despite record imports

THE availability, or lack, of urea in Australia is causing concern at the moment.

Urea is an essential input to ensure crop yields are high and provide an exportable national surplus of grains.

The data on fertiliser imports into Australia is delayed because the May imports have only recently been released.

So, the data we are using does not include June. During May, 570,000 metric tonnes of urea was imported into Australia.

This was the highest-ever month of urea imports.

This year, imports have been above the standard deviation and well above the average (2011 to present).

The usual peak month for imports is June, so it may be logical to expect that this year’s peak has come a month earlier due to the sheer scale of imports.

We will see what June imports are like in a month’s time.

It is also essential to look at the cumulative imports of urea into the country.

The chart displays the total cumulative imports for the year. I have displayed the five-year average in the chart alongside 2021 and 2022.

I have chosen the five-year average as this includes years of low and massive demand for urea.

The demand for urea tends to be higher in times of higher moisture. Using these time series provides a range of different years with differing seasonal conditions.

By the end of May 2023, 1.37 million tonnes of urea had been imported.

This year has a record level of imports, above both 2021 and 2022, both of which were solid demand years.

Urea imports have been strong, even in comparison to recent years when demand for urea was high and obvious ahead of the typical import period of May-June.

There is very little independently sourced information on the fertiliser trade and market in Australia.

Our business is one of the few independent information providers and has no linkages with the fertiliser industry.

The data available is relatively limited compared to other agricultural commodity markets in Australia.

What other considerations need to be taken into account?

• This data is the national imports. It is not, therefore, split into states. So while imports have been strong, the volume may not be in the right locations.

• Domestic production has declined, necessitating increased imports. Gibson Island produced approximately 280,000t of urea. However, this domestic shortage has already been exceeded.

There are significant issues in the Australian fertiliser value chain that need to be addressed at some point.

Australian farmers are very nervous about the situation, especially in light of local domestic production falling and declining trust.

There is no openly available pricing for fertiliser in Australia. In covering fertiliser pricing in Australia for a long time, I have worked to try and improve price transparency in several ways.

I thought I would look at pricing differently for this piece.

It is important to note that this is a rudimentary price. It is taken by taking the total value of imports (CIF) divided by the volume for each month from the trade data report to UN Comtrade.

This doesn’t give us an exact figure because each vessel will be priced differently, but is merely used to show the trend of pricing levels.

It is also important to note that this does not include onshore costs or margins. In May, the import price was $543, down from the April price of $561.

It is the lowest import price since 2021. This is an attractive pricing level.

• Andrew Whitelaw is co-founder and director of Episode 3 (EP3)