Overhead costs for Ammonia have risen faster in the last two years than most farmers have ever experienced. According to trade sources, rising Ammonia prices incentivize European companies to restart idled equipment as supply constraints keep the prices high. According to figures supplied by the American Farm Bureau Federation, fertilizer is an essential tool in agriculture, accounting for 15% of farming costs in the United States.

In the United States, local farmers have been struck by increasing fertilizer prices worldwide, making production more expensive and prompting many to stop producing entirely. As a result, the cost of fertiliser has tripled in the last year as demand for liquid Nitrogen and Ammonia, two crucial elements in a contemporary fertilizer mix, skyrockets. As per the ChemAnalyst database, the prices for Anhydrous Ammonia in the United States on April 1 were reported at USD 1570/MT FOB New Orleans, while Anhydrous Ammonia CFR Tampa at USD 1355/MT.

Yara, a significant manufacturer of Ammonia, has halted its output in Ferrara, Italy, and Le Havre, France, last month, to call upon the "record-high natural gas costs in Europe." After completing a series of industry-reported transactions, including a record-high settlement price of the monthly CFR Tampa contract at USD 1,625/MT, the firm declared earlier this week through media reports that it was resuming its Ammonia production at two locations. Although there is still potential for more price appreciation in the next couple of weeks, according to a European Ammonia respondent, the European restarts might stop dramatic price increases.

As per ChemAnalyst, "Due to supply shortage in the fertilizer industry, prices are expected to rise in the upcoming week. The fertilizer industry will be further squeezed as overall production costs and freight costs rise. Due to increased Natural Gas prices, Ammonia production in Europe and other parts of the world is anticipated to recoup some of the lost production from late 2021 and early 2022. As Natural Gas is a vital feedstock in the production of Ammonia, any change in the price of Upstream Natural Gas could have a significant impact on the pricing."