The record prices for fertilizers have been put off for the time being, but there is still a lot of uncertainty. This is stated by Rabobank in a market analysis of fertilizers. Phosphate and potash fertilizers are expected to fall in price in the near future, while nitrogen fertilizers may become stable or rise again.
After a long time, fertilizers are considerably cheaper again and that has a positive effect on the relationship between supply and demand. According to Rabobank, the 'affordability index' of fertilizers has already improved considerably compared to a year ago and in some regions of the world a rapid recovery of fertilizer use is possible in 2023. This affordability index is calculated by comparing the price level of fertilizers with the prices of a number of agricultural products. In other words, it means that the use of fertilizers is worth using for growers.
The use of fertilizers will pay off in 2023
Fertilizer prices rose in 2021 due to the Covid-19 pandemic and record rainfall when Russia invaded Ukraine last year. According to Rabobank, the affordability index of fertilizers has not been this low since the economic crisis of 2009. Lower demand and ample supply have now led to price reductions. Rabobank analysts expect that buying fertilizers will pay off again for growers in 2023. The affordability index will rise in the coming months, but what the market will do next remains uncertain.
For nitrogen fertilizers we are almost at the price level in the spring of 2021, but this has not yet led to normal demand for this fertilizer. The analysts say that the price of urea and other nitrogen fertilizers will remain around the current price level in 2023 and could rise again in 2024. Much will depend on the availability of natural gas next year. Stocks are now well stocked and the natural gas price is still falling, but much will depend on the gas supply and consumption next winter.
Phosphate fertilizers have only fallen slightly in price and are still considerably more expensive than before. Rabobank cites the reason that China exports less worldwide than before the Covid-19 pandemic. On the other hand, demand for the expensive product also remains low. However, Rabobank expects that China will be able to increase exports in the near future because domestic consumption will decline, causing the price of phosphate fertilizers to fall.
Potassium fertilizers are expected to decrease in the coming period. Both Brazil and India have attracted significant volumes from the world in recent months, but the supply is still very ample. Prices in Europe are falling compared to other parts of the world. Belarus, a major supplier of potash on the world market, can further drive down the price if it increases its exports on the world market. Reports show that exports from Belarus are increasing and increasing its market share despite sanctions from Europe and the US. Despite the fact that prices are already falling, the demand for potash has hardly increased.