Western Australia out of urea, suppliers assure they have enough to fill orders

There are reports that Western Australia is already out of urea, with most suppliers thankfully having enough for the orders that have been placed.

However there are concerns that if there is good rainfall later this month, there may not be enough urea available.

In spite of Bureau of Meteorology forecasts of a dry winter, on the back of a developing El Nino event, there have been heavier than anticipated winter rains in much of the southern cropping belt.

This has led to a revision in yield potential and farmers have scurried to source urea.

However, in May when fertiliser companies were putting in orders with international suppliers to meet winter topdressing demand, there was muted grower interest due to concerns about the dry and the falling price of urea, meaning there is lower supply than usual.

Over the past few years, companies such as Nutrien Ag Solutions have increased their supply of fertiliser in the WA market to meet growing demand, according to the company's fertiliser manager Shane Page

"For this planting season, unanticipated positive conditions saw strong demand, which we have been able to meet," Mr Page said.

"We've supplied a record amount of urea to WA growers this year and as the season progresses we're seeing more growers now requesting UAN.

"We're confident that we will be able to supply nitrogen for the balance of the season."

Similarly, CBH Fertilisers head of fertiliser David Pritchard said they were well-positioned to cover everything that was contracted, plus a buffer.

He said one of the factors for the shortage was the shift from UAN to urea as a cheaper fertiliser source, which made it difficult for importers to decide how much to bring in for the season.

Given the poor forecasts for the season, and the unpredictability of rainfall so far this year, most importers bet on low rainfall and low urea needed.

"It was because the switch was unknown, and companies don't bring in endless supplies of urea, any old year - it has to be forecasted as a bumper year," Mr Pritchard said.

"That's just logistics, and a market driven piece that sometimes you just can't get right."

Fertilizer Australia executive manager Stephen Annells said the shortage was caused by a "perfect storm" of factors.

"It has been very unusual, we have had unexpected demand after better than expected winter rain, we've got the falling global urea price and then the lowering of production, all three factors have combined to cause this shortage," Mr Annells said.

"Unfortunately these situations, where people, both producers and suppliers, have followed their best business practices and still found themselves with an issue can happen when you see these vagaries in climate, especially after such a strong forecast for dry had everyone predicting markedly less urea usage."

He said growers and suppliers needed to work together to come up with strategies to allow them to remain nimble when supply and demand dynamics rapidly changed.

"Obviously more government support for local urea manufacturing would really help in cutting out the lag, but the closer both sectors work together the better in ensuring needs are communicated.

"Suppliers are not comfortable taking massive forward positions given the volatility of the market and the risk of being stranded with expensive product, so we'd invite the growers to think of ways to help share the risk."

Mr Annells said there was talk of moving fertiliser north from Brisbane, which serviced areas that were drier and with less demand for urea, back down to southern areas, but said this would add significantly to the landed cost for growers.

Mr Pritchard expected markets to stabilise in the coming six to twelve months, which will make nitrogen more affordable for growers.

"It's good news that everything's been falling," Mr Pritchard said.

"We're back to the prices that we saw a couple of years ago, so it's more palatable."

The good start to the season has also put CBH Fertilisers on track for a record-breaking year, having produced a record output of 60,000 tonnes for June, which is between a 10-20 per cent increase from May.

Mr Pritchard said the new fertiliser facility, which has been in full use since mid-April, was still ramping up to full capacity and "ironing out" processes.

"We've put around 70,000 to 80,000t through that facility, and everything's gone really well, so that's positive," he said.

"We'll be looking to crank that up next year out of the new facility to double that."

CBH's Fertilisers' 2033 target of 15pc market share is looking not just achievable, but maybe even easy.

Mr Pritchard said they were on track for the target, and he thought they might achieve the target even sooner, with a client base of 500-600 farmers and steadily growing.