Fertilizer prices have remained fairly stable this year. That doesn't mean they're back to pre-war levels, before the Russian invasion of Ukraine. Rabobank predicts higher fertilizer prices in the medium term, according to a recent analysis. In Europe, producers are worried about the pressure from cheap Russian imports.
Already in 2021, barely a year before the outbreak of the war in Ukraine, fertilizer prices rose sharply. Sometimes by as much as 40%. Higher gas prices, sanctions against Belarus and the coronavirus were the cause. After Russia invaded neighboring Ukraine – with the side effect of a huge increase in gas prices – fertilizer prices exploded. At the beginning of 2021 you paid €28 per 100 kilos for potassium-60, at the peak in 2022 it was almost €90.
Prices lower
In the last quarter of 2023, the prices of the various types of fertilizer have found stability. At the beginning of 2024, most prices rose slightly, with the exception of KAS, to decrease slightly again in the summer months. For example, at Farmers4All you pay €32,30 per 100 kilos for KAS (delivered in 600 kg big bags) in mid-September. That is slightly above the level of a year ago. At that time, the price level fluctuated around €30. For chlorinated potassium 60, the company pays €40,80, compared to €46,30 at the beginning of this year. Triferto charges €60 for loose potassium 39,20, compared to almost €46 at the beginning of this year.
In a report by Rabobank, published on September 9, analysts from the bank assume rising fertilizer prices in the coming half year. The model they use shows that costs for farmers will increase. On the other hand, there are lower product prices, resulting in negative margins. The prices of phosphate-containing fertilizers such as MAP (monoammonium phosphate) and DAP (diammonium phosphate) in particular fluctuate strongly. The price levels on the world market are considerably higher than last year. Potash is considerably cheaper, the bank reports.
Demand is decreasing
There are several reasons for the price increase. The growing season in the southern hemisphere has started, which means that the market is experiencing seasonal influences. "Due to increased pressure on farmers' profit margins, partly due to lower product prices, we do not expect an increase in the demand for fertilizer," says senior market analyst Bruno Fonseca of Rabobank. "At the same time, we expect the prices of nitrogen and phosphate to remain above the multi-year price level. As a result, the Rabobank index shows a negative picture for the coming eight months."
The index shows that the price of phosphate has increased significantly in recent months. Nitrogen and potassium are stable in price and urea has fallen slightly in price after a peak in July, when supply was compromised. The price formation of gas remains an important factor for fertilizer, especially towards the winter in the northern hemisphere. Geopolitical tensions also strongly influence this market and therefore indirectly also the fertilizers.
Russian fertilizer
China and Morocco have allowed less potash exports this year, while tenders for phosphate from China and India are also influencing market prices. Europe is currently being fed heavily with fertilizer from Russia. This product is not on the sanctions list. European fertilizer producers are therefore sounding the alarm. For a fraction of the (gas) price, the Russians can produce fertilizer, which is often of inferior quality. Yara also reports on the supply of Russian fertilizer in the Benelux, among other places, where it is known that several ships have called at Belgian ports. They emphasize product quality, higher environmental impact and moral issues.
Back in April, Yara CEO Svein Tore Holsether was outspoken about Europe’s dependence on Russian fertilizers. Other producers, such as Germany’s SKW, echo that message. Now, a third of all urea used in the EU comes from Russia. A record amount was imported in 2023, Eurostat data shows. Poland imported $120 million worth of Russian urea, up from $2021 million in 84.
In total, the EU imported 16,34 million tonnes of artificial fertiliser up to and including September. More was imported in all months of the year compared to a year ago. This mainly concerns nitrogen-containing fertilisers (5,87 million tonnes). Last year, this was a total of 9,85 million tonnes. Particularly in July, considerably more nitrogen was imported. 702.000 tonnes compared to 569.000 tonnes last year. That is almost a quarter more. Russia accounts for a third of the total nitrogen import.
Production moved
The import of cheap artificial fertilizers, especially nitrogenous ones, is a sore point for European manufacturers. They are increasingly moving their production outside the EU. Less strict environmental regulations apply there and the supply of gas is cheaper. For example, the German SKW is working on a factory in the US and BASF has been working for some time on transferring its fertilizer production from Europe to the US and China.
Blocking or making fertilizer imports less attractive is a sensitive issue in Brussels. The extremely high prices of 2021 and 2022 are still fresh in the memory. Coupled with lower product prices, it would mean a 'double whammy' for European farmers.
Buy now or wait?
Now the big question: Is it smart to buy fertilizer now for the new season? Gas prices are already at their 'winter rise', although this is accompanied by fluctuations. With the arrival of colder weather in Northern Europe, the demand for gas increases. At the same time, the share of solar energy decreases, while wind energy can be generated more easily. A more difficult global (fertilizer) market ensures that prices do not fall further and, according to analysts, will increase in price. By purchasing part of the required fertilizer now, you can spread the chances and avoid a spring peak.