(Bloomberg) -- Fertilizer prices that had hit records are now plunging as buyers reel from sticker shock, but that doesn’t mean the market squeeze is over.
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The June spot price in Tampa, Florida for the nitrogen fertilizer ammonia settled at $1,000 per metric ton, a drop of 30% from May’s $1,425 per metric ton, according to Green Markets, a Bloomberg company. Even with the drop, however, prices for ammonia are still 87% higher than a year ago, and supply chain issues continue to wreak havoc on global markets.
Demand destruction is part of the decline. Places like Southeast Asia are seeing buyers unwilling to pay the record high prices for ammonia that were posted in April and May, said Green Markets analyst Alexis Maxwell. It also reflects the declining cost of ammonia production as European natural gas prices fell in the second quarter, she said.
Read More: Can the World Feed Itself? A Fertilizer Crunch Is Wrecking Crops
Wholesale prices for another type of nitrogen fertilizer, urea, dropped nearly 8% Friday in New Orleans to $585 per short ton. But retail prices are still nearly double that, at $1,030 per short ton.
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