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Bearish Outlook Continues Driving Global Fertilizer Prices Lower

Rabobank says a bearish sentiment in the global markets continues driving fertilizer prices lower after an extended run of significantly higher costs. Samuel Taylor is the executive director of farm inputs research for Rabobank and says fertilizer prices have seen quite a turnaround.

Taylor; “Affordability of fertilizers has basically inverted in a year, going from one of the most unaffordable periods in a cycle, and that cycle was a long cycle, a multi-decade cycle, to one of the more affordable. And so, you’ve seen strong underlying commodity prices, corn, and soybeans, relative to what we were necessarily used to in the previous low cycle. And you’ve seen fertilizer prices come off their highs that we saw immediately after the start of the Russia-Ukraine crisis.”

He says certain input prices may not have reached the bottom yet; “I think there’s probably still a little bit of downside in some of the pricing, particularly on the potash and the phosphate, but nitrogen might be nearing the low point – partly seasonal, partly demand and improvements over the coming months. But basically, the context of this is you saw the elevated pricing as a result of the Russia-Ukraine pricing hitting some macronutrients, potash in particular, hitting real-time highs in certain geographies out of fear of supply and availability after the Russia and Belarus market. And you’ve just seen this kind of month-after-month adjustments down lower.”

Retailers are going to start building their supplies to get ready for fall applications and 2024 needs, but he doesn’t necessarily see a sharp rise in prices ahead.

Taylor; “I wouldn’t necessarily assume that we’re going to see some ratchet higher in pricing because there’s still a decent amount of global availability of all these products. In the high fertilizer price environment, farmers do adjust their practice where possible. They might do soil testing, they might put a lower volume down, and they might farm with all the agronomic flexibility that they’re allowed to. And so, this caused, inventory to build up in the global supply chain. And on the potash and phosphates, we still have to deal with that a little bit. So maybe we’re nearing the floor. Maybe we start to see some upward momentum in pricing over the next two months. It might not be tomorrow. It might be two months from now we see it, but it could be more imminent.”

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