A global shortage of mono and di-ammonium phosphate - MAP and DAP - is having a sudden impact on Australian prices just at a time when growers are budgeting on new crop fertilisers ahead of an April plant.
Temora grain trader Bill Preston said the price rise had been unexpected. "We were getting quotes of $595 ex-port," he said. "Now it's $675/t plus freight."
Australian Fertiliser Services Association director Shane Dellavedova reported that world market value of ammonium phosphates continued their upward trend this week, up US $120 since December - the sharpest rise for many years.
"This wasn't forecast," he said. "There were indications the global market had to shift, but not so much."
Mr Dellavedova said prices would remain volatile and shift week by week. "We'd like to think this will be as high as they go, but we don't know."
Analysts had been expecting the disruption since mid last year when the US announced an investigation into subsidised gas being used to make the ammonia component of these fertilisers, raising tariffs on imports from Russia and Morocco.
Supplies usually bound for Australia are now going to the US to fill those short orders.
This would be much more serious if we didn't have the Dutchess mine.
- Shane Dellavedova
"There is the same amount of product in the world just that it now has to flow to us through different channels," Mr Dellavedova said.
The supply squeeze has been hampered by maintenance shutdowns at production plants during this first quarter of the calendar year.
Australian producer Incitec mines rock phosphate at Dutchess near Mt Isa and will now supply a significant volume of MAP and DAP for domestic consumption.
During the financial year 2019, 81 per cent of mono-ammonium phosphate sold here was imported.
"We would be in a much more serious situation if we didn't have the Dutchess mine," Mr Dellavedova said. "However, pricing is significantly dearer than we have been expecting."
The second ingredient of MAP and DAP is ammonia, made from natural gas - the fossil fuel at the centre of the tariff battle which caused this price spike.
Only last week University of NSW researchers published proof that nitrate and nitrite can be made on-farm from renewable energy using a row of solar panels and a plasma gun to fire lightning into bubbles of water.
Traditional ammonia production consumes 2pc of the world's energy and is 1pc of the industrial world's carbon dioxide emissions, so green methods of manufacture using solar power in the middle of the day, now have increasing market value.
"There is enormous potential for nitrogen to be made this way in Australia using renewable energy," said Mr Dellavedova.
"The science is proven. Now it needs to be made cost competitive."
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