Lower fertiliser prices have negatively impacted on Yara International’s first quarter results, with operating profits falling 34% compared to the same period last year.

Despite a drop in revenues, sales volumes of finished fertiliser and industrial product at the world’s largest producer of fertiliser grew by 4% year-on-year.

Outlook

Chinese urea production and export costs continue to be the main reference point for global nitrogen pricing and this year exports from the country have fallen by 22%.

However, the strong ongoing urea capacity increases outside of China are weighing heavily on global urea prices and, according to Yara, this is a price-lowering situation which could persist throughout 2017.

International

Yara has operations in 60 countries, working with 15m farmers selling into 150 countries.

First-quarter nitrogen fertiliser deliveries in western Europe were down by an estimated 6% on a year earlier, with imports down 25% as producers increased deliveries, primarily of nitrate products.

In the US, nitrogen deliveries are estimated to be 6% higher than a year earlier, with increased domestic production as well as stronger imports.

To meet growing demand for premium products in particular, Yara is expanding capacity in several plants, with most of the projects due to be completed during 2017 and 2018. These projects are expected to generate approximately $600m extra operating profit.

Annually, Yara sells more than 26m tonnes of fertiliser to grow 240m tonnes of grains which feed 240m people worldwide.

Fertiliser prices to remain low in 2017 – Yara

Lower fertiliser prices have hit Yara profits by 34% as global supply capacity increases