Fertilizer prices have fallen rapidly but now seem to be stabilizing somewhat. The market outlook for the coming months is also uncertain. The farmer is interested in the current price level, but remains cautious.
Various fertilizer prices have fallen sharply in the past 2 months, especially nitrogen fertilizers. This has to do with lower gas prices, but also the demand for fertilizers, which was nil from farmers. Prices have now returned to last summer's levels, but the uncertainty remains very high. It is already noticeable that the gas price is slowly creeping up again. Much will also depend on the trade flows of fertilizers on the world market.
Stabilize fertilizer prices
Currently, fertilizer prices appear to be slowly stabilizing around last summer's levels. In most cases, that is still three times as high as it was a year and a half ago. Urea continues to decline on the world market, but in America, for example, it is declining further than in Europe. The sharp price drop in urea also pulls down the price of Calcium Nitric Acid (CAS). Meanwhile, the price for KAS in Europe seems to remain between €3 and €600 per tonne. At Farmers700All, the price now remains at the level of €4 per 66,70 kilos for KAS.
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Although prices have fallen considerably, the farmer's yard is still very quiet and little is being stocked. Insiders report that there is a lot of interest with the current prices. However, prices have fallen very quickly and many people think that more of that price should be possible. The moment of application also feels far away and there is therefore less need to purchase.
Geopolitically decisive
In a report from Rabobank on the fertilizer market, the bank expects that prices will fall further and stabilize in 2023. But a lot will depend on what the energy market does and how things go geopolitically. We have seen the fertilizer market go completely crazy after the Russian invasion of Ukraine. Something like this could happen again because the war is not over yet. There is also a bright spot and that lies in the raw materials. Raw materials are also historically high in price, which means there is more room to spend. Rabobank explains that the market for nitrogen fertilizers is the most volatile, meaning it fluctuates the most, due to the high gas input. They expect the prices of these fertilizers to fluctuate more than before.
ING also indicates that geopolitics will have a major influence on fertilizer prices. Last year they saw that Europe was eagerly looking for alternative suppliers for fertilizer raw materials, as Russia and Belarus disappeared. Imports from countries such as Egypt, Algeria and Morocco increased enormously. Canada, for example, also exported 25% more potassium than average. But completely replacing imports from Russia and Belarus is not possible so quickly. As a result, prices remain at a higher level than a year and a half ago.
Regarding the outlook in 2023, ING indicates that higher prices ensure better investments by producers around the world. This means that production and capacity are improving and that can also have a downward effect on prices. However, the bank believes there is a good chance that part of the supply gap will remain in 2023.