MEDIA CENTER

Understanding The Global Market
Urea Fertilizer Market

One of the most superior nitrogen sources, urea is a familiar term to most golf course superintendents, lawn care operators and sports field managers, although most don't understand its complexity. But understanding how urea is produced and realizing where our nation's supply comes from will provide a new appreciation for urea, the most widely used nitrogen fertilizer. To help shed light on the global urea market, AGROTAIN provided answers to some commonly asked questions.

What is urea and how is it produced?

Most often sold in the form of prills or granules, solid urea is used as a nitrogen-release fertilizer. Whether applied in a solid state or dissolved in water for spray applications, urea is applied to turf where it — over time — reverts back to ammonia and CO2 for plant uptake and subsequent feeding. Although produced naturally in humans as a waste product, commercial urea used for crop and turf applications is produced synthetically from ammonia and carbon dioxide. The large quantities of CO2 produced during the production of ammonia from coal or natural gas allows for the synthetic production of urea.

Why is there a global urea market?

Spanning beyond turf, urea is used prevalently in agricultural applications. And with populations growing and the viable cropland shrinking, the use of environmentally sound fertilizers to help feed essential crops is a necessity. Growing world population and the desire for a better diet creates a demand for greater, more efficient crop production.

While the demand for fertilizer is increasing, the cost of natural gas, which is the backbone for producing ammonia, is also rising. With more fertilizer required in the U.S. as well as other heavily populated areas of the world, and abundant natural gas supplies found throughout the world, the urea market in the past decade has evolved to global proportions.

How is urea pricing determined?

Urea is the most widely used fertilizer in the world, and increased international demand has caused urea pricing to increase. In fact, 2008 marked some of the highest urea prices ever recorded. However, many factors determine pricing. Up to 85 percent of the hard costs associated with urea production results from natural gas, so the fluctuating price of natural gas will affect the price of urea. In addition, increased transportation costs to move urea from one location to another will affect the bottom line. Perhaps most important, supply and demand weighs heavily on the cost of urea.

What countries supply the market?

Representing more than 60 percent of the world's production, Asia remains the top urea producer. Other notable producers include the U.S., the Middle East, and Eastern Europe and Central Asia.

What countries are the biggest importers?

With each hovering at about 20 percent, South Asia, Latin America and the U.S. are the world's largest urea importers. In terms of apparent consumption, however, Asia — at more than 65 percent of the world's market — appears to be the largest consumer, with the U.S. consuming 11 percent of the total supply.

Lange-Stegmann, parent company to AGROTAIN International, imports the bulk of its urea from Egypt, China, the Middle East and South America.

What is the current and long-term scope of the market in the U.S.?

Since 1999, 26 U.S. ammonia plants have closed and others remain idle due to high natural gas prices. However, while fertilizer consumption increases, national production continues to fall.

With imported urea continuing to meet the national demand, Lange-Stegmann — recognizing the need for a viable transportation hub — took advantage of its prime St. Louis location to build the nation's largest import urea terminal. The St. Louis Urea Center adds 63,000 tons of fertilizer storage to its existing space, increasing product capacity up to one million tons annually.

The company also made a significant investment by building the Stabilized Nitrogen Center to help meet the surging demand for urea-based nitrogen fertilizers. The company markets these stabilized nitrogen products through AGROTAIN International to both turf and agricultural markets in the U.S. and throughout the world.

In general, the urea market remains volatile, but as world population increases and the desire for a better diet remains strong, so will the need for fertilizer nutrients. One thing is certain: U.S. farmers today are among the most efficient users of fertilizers. New research is helping to identify the best time to fertilize, as well as where to place the fertilizer. These insights and products from companies like AGROTAIN International improve fertilizer efficiency, resulting in improved consumption by the plant.

We hope this has shed new light on the complicated subject of the global urea fertilizer market. This is the first part of a five-part series that helps to share insight about the depth of urea and its role in the turf profession. In future documents, look to learn more about the transition of agricultural products to turf, resource management and making sense of fertilizer research.