A new report from RaboResearch highlights the significant challenges facing the global fertilizer market in 2024. Although there was initial optimism for recovery, fertilizer demand has failed to continue the growth seen in 2023, particularly for key fertilizer products. With farmers' profit margins under pressure, the fertilizer affordability index currently remains neutral but is expected to turn negative later this year.
Market Performance
In the first half of 2024, fertilizer prices did not maintain the recovery momentum of 2023. As the Southern Hemisphere's crop season approaches, certain fertilizers like monoammonium phosphate (MAP) and diammonium phosphate (DAP) are facing serious challenges. Their prices remain significantly higher compared to previous years and other fertilizers like potash.
Declining Fertilizer Affordability
Fonseca explained that strong global crop yields have caused commodity prices to drop, further shrinking farmers' profits. At the same time, nitrogen and phosphate fertilizer prices remain above historical levels. The affordability index suggests that fertilizer affordability may turn negative over the next eight months.
Phosphate fertilizers, particularly MAP and DAP, have seen a notable decline in affordability due to rising prices and unfavorable commodity prices. In contrast, the affordability of nitrogen and potash fertilizers remains stable, though urea prices fluctuated in late June due to supply issues. Potash affordability improved slightly in July, as falling fertilizer prices offset worsening commodity prices.
Nitrogen Fertilizer Outlook
The report indicates that nitrogen fertilizer prices will continue to fluctuate due to several uncertainties. Urea prices were on a downward trend in the first half of 2024, but production stoppages in Egypt due to natural gas supply issues caused a 17% price increase in just one month. Additionally, European natural gas prices rose from €31.4/MWh in mid-July to €39.6/MWh in August, adding to market volatility.
Tight Phosphate Fertilizer Supply
The global phosphate fertilizer market faces tight supply, which is likely to keep prices high. The three major exporters—China, the U.S., and Morocco—lack clear supply strategies, adding to market uncertainty. Although China resumed some production in April 2024, prices have not fallen. In 2022 and 2023, China's phosphate fertilizer exports dropped significantly to 6.3 million tons, well below the previous 9 million tons annually.
The U.S. has adjusted its phosphate market strategy, reducing exports and increasing phosphate rock imports, while Morocco has decreased phosphate rock exports but increased MAP and DAP exports.
Optimistic Potash Market
The outlook for potash remains optimistic, with stable supply expected over the next six months. Continued supply from sanctioned regions and procurement contracts from China and India will support the market. India and China are currently negotiating to lower potash prices by 12%, adding further pressure to other markets.
Impact of Agricultural Prices on the Market The continued decline in global agricultural commodity prices throughout 2024 is putting pressure on global fertilizer demand. Falling prices of major crops like corn and soybeans—particularly due to record production in the U.S. and Brazil—are reducing farmers' profits, which in turn impacts fertilizer demand growth.
Geopolitical and Natural Gas Price Uncertainty
The report also highlights that natural gas prices, geopolitical risks, and a potentially harsh winter could influence short-term market dynamics. In addition, changes in phosphate export strategies from China and Morocco, as well as new potash tenders from India and China, will be critical factors to watch in the coming months.
In Summary
Despite the multiple challenges facing the global fertilizer market in 2024, particularly in terms of price volatility and weak demand, there are some positive signals in the nitrogen and potash sectors. The next six months will be pivotal as changes in fertilizer prices and supply dynamics could significantly impact global agricultural production.
Attention: The above information is for commercial reference only due to the diversity of information collected, and Kelewell is not responsible for the authenticity of the data.
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