Most fertiliser prices are returning to their historical averages, and in some cases, like urea, current values have fallen to historical levels, according to a new Rabobank report published today (Thursday, May 25).
According to Bruno Fonseca, senior analyst – farm Inputs at Rabobank, on the commodities side, “values remain above average” in some cases, due to tighter stocks.
“The combination of these two factors is helping affordability,” he said.
But the report also highlights that “global consumption” may take two or three years to recover, and the speed of recovery will depend on how long the current positive cycle lasts.
Rabobank said the “extreme market volatility and record-high prices” which severely impacted fertiliser demand in 2022 had settled.
Fonseca said when the relative price of a basket of commodities is compared to a basket of fertiliser it is now “in positive territory”.
Rabobank’s latest outlook forecast for fertiliser market outlook suggests that nitrogen-based fertilisers are very “volatile” because of their connection with oil and natural gas.
“Nevertheless, the necessity of buying back lost demand sent urea prices on a downward trend before it struck ammonia.
“The subsequent price mismatch led the ammonia/urea ratio to skyrocket. It wasn’t until natural gas prices began to decline seasonally that ammonia followed suit, nearly halving the ratio.
“Global demand for urea will benefit from price stability around current levels and will slowly rise throughout 2023 as it transitions from sluggish in 2022 to healthier in 2024,” the report outlined.
According to Rabobank unlike potash and nitrogen, phosphate prices soared last year after the war in Ukraine began.
“Consequently, phosphate consumption during 2022 had a considerable and much anticipated drop. Despite weakened demand, prices remained at elevated levels, due in part to reduced Chinese exports.
“Now that Chinese domestic consumption is coming out of peak season, we might see Chinese volumes return to the global market, depending on the export parity, which might aid downward price movement,” the report detailed.
Meanwhile potash prices, according to Rabobank are continuing to fall.
“If Belarus raises its market share, as most of the market expects, the increase in exportable volumes would push prices down even further,” the report highlighted.