THE spot pricing for urea has dropped by about a whopping $650 over the past year, indicating that prices in the global commodity market may have finally stabilised.
The global urea price hit mid-$900 during March, 2022, a result of factors, including the Ukraine-Russia war, but since then it appears supply has reverted to a new "normal".
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CSBP general manager Mark Scatena (pictured) said a downward trend had been occurring with urea commodity pricing, and even compared to a few months ago there has "clearly been a deflation" in the market.
The temporary spike of $900 seen last year was a function of limited supply, driven by high gas prices.
"Gas became too expensive in some locations to manufacture urea, so urea plants were shut, and therefore, the price of urea went very high," Mr Scatena said.
Since then, more stable gas sources have been discovered.
Other factors, such as Russia being sanctioned by northern European countries meant the ability to access urea was restricted by federal government tariffs.
Prices have begun to stabilise since China's reemergence into the market, as it had previously closed its borders to protect its domestic markets.
"So really, it's a normalisation of what I call international trade flows," Mr Scatena said.
"So you saw this very abrupt reaction last year - challenges of gas, sanctions, the unavailability of China, drove prices up and some of those things are now unwinding."
Mr Scatena said there was no "normal price" with global commodities, but the normalisation to some typical trade flows, making supply more available, has helped prices to fall and revert to a "more normal commodity cycle."
It takes time for these price drops to be mirrored in the Australian market, according to Mr Scatena, due to the timing and extra costs to get an initial supply of urea into Western Australia.
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"Of course, like all our sophisticated growers, everyone is buying product at different times of the cycle," he said.
A major company such as CSBP has to find cargo to purchase, then freight the supply of urea.
It is buying urea throughout the entire year to ensure it is available at different times - both for seeding and in-season application.
"Those global commodity prices that you see in other locations often take some time to be realised in local markets," Mr Scatena said.
