Fertiliser prices settle

Rabobank’s semi-annual fertiliser outlook, ‘What is next?’, indicates despite recent market volatility and record-highs global fertiliser prices are expected to settle in 2024.

The outlook shows while the Israel-hamas conflict creates some uncertainty in future fertiliser markets, the current impact is manageable.

Report co-author, Raboresearch farm inputs analyst Vitor Pistoia, said 2023 had been a calmer year for the market and could be seen as a transition year, even with remnants of 2022 market complications.

He said the big picture was currently positive for Australian farmers buying fertiliser, with prices coming down ‘massively’ since mid-2022.

“The past seasons have been good in terms of performance, so there has been reasonable cash flow throughout agricultural supply chains,” he said.

However, Mr Pistoia said if the Israel-hamas conflict escalated to the broader Middle EastNorth African region, there could be notable impacts on fertiliser supply – as well as grain, meat and dairy demand.

Israel is a significant exporter of potash and phosphorus – in 2022 exporting six percent of the world’s potash and eight percent of its phosphate fertilisers.

Rabobank says it remained to be seen how much of those trade volumes would be impacted in coming months.

The Middle East-north African region accounts for about 30 percent of the world’s nitrogen fertiliser exports, more than 25 percent of global mixed fertiliser exports, about 10 percent of potassic fertilisers and almost half of phosphatic fertiliser exports.

The bank’s models indicate a recovery in global fertiliser usage in 2023, up by about three percent, compared to a seven percent drop in 2022.

Mr Pistoia said initial analysis for 2024 suggested an increase in global fertiliser use by close to five percent.

“Across the country, there is a wide variety of crop and pasture conditions,” he said.

“While there is still room for improvement or even deterioration of conditions in the paddocks, some elements are already consolidated and will set the tone for fertiliser demand for the coming season.”

Mr Pistoia said the question of how the 2023-24 harvest season would end, still played a part in decisions to fill sheds with fertiliser at this stage.

“Undoubtedly, some regions of the eastern states will reduce application rates due to the current dry seasonal conditions,” he said.

“Increased fertiliser demand might come from South Australia, Victoria and southern New South Wales, which have fair to good crop conditions.”

Mr Pistoia said another question about how much farmers would increase fertiliser application within budget was based on impacts of the recent drop in the Australian dollar and crude oil hikes.

“On the upside, besides lower global fertiliser prices, we have many commodities that have firm to good price levels – especially from an Australian perspective,” he said.

“Lentil prices are tracking well due to damaging rainfall in India and there is a good floor for the wheat, barley and canola markets.

“The basis – which is the price difference of local markets versus the global reference – is back in positive territory.”