Shrinking farm margins have left farmers “price-sensitive” to fertiliser purchases despite the fall in prices during the first half of 2023, according to a new report published today (Tuesday, October 24).
The latest fertiliser outlook report from Rabobank highlights that ammonia and urea production costs in Europe have improved, but are still “elevated”.
The bank also warned that natural gas price dynamics “determine ammonia imports” competitiveness in European production but that so far 2023 is a “much calmer year” than 2022 for the fertiliser market.
It also sets out in the report that there are currently “much better conditions” for buying fertilisers compared to a year ago and that it expects usage growth of nitrogen to increase by 2%, phosphate to increase by 3.9%and potash by 5% in 2023.
Heading into 2024, the bank’s initial analysis suggests that there will be an increase in fertiliser use by close to 5%.
However according to Bruno Fonseca, senior analyst farm inputs at Rabobank, it is difficult to forecast how the year may end.
He said: “As winter approaches in Europe, there is more uncertainty in the natural gas market and related uncertainty in the production cost of nitrogen fertilisers.”
According to Fonseca although the nitrogen market is facing challenges, the potash market is going a period of “ample supply” while the phosphate market is also on the rise.
Global fertiliser markets
One key risk on the horizon according to the latest Rabobank report could potentially be the impact of current conflicts on global fertiliser markets.
It highlights that Israel is a “sizeable supplier of phosphate and potash” accounting for around 3% of potash exports globally.
“Disruptions in exports could cause price spikes, and the conflict may discourage vessel operators from approaching the Mediterranean port of Ashdod, causing delays and additional logistical costs,” the report stated.
But despite the potential risks, the impact on fertiliser markets is viewed as marginal at this stage.
“Global fertiliser markets have sufficient availability and sufficient alternative suppliers of potash and phosphate products in case of logistical disruptions in Israel,” Fonseca added.