Global fertiliser prices are expected to settle in 2024 following the extreme market volatility and record-high prices of recent years.
This is despite the uncertainty posed by the Israel-Hamas conflict as it currently stands, Rabobank says in its semi-annual fertiliser outlook report.
While escalating tensions in the Middle East create some uncertainty in the outlook for fertiliser markets, the current impact for the food and agri sectors is manageable.
Report co-author and RaboResearch farm inputs analyst Vitor Pistoia said overall, farmers around the world may feel some negative impact due to potentially rising costs of energy and fertilisers, at the margin, as well as slightly lower import demand and prices for grains and oilseeds due to the Israel-Hamas conflict.
“However, if the conflict spreads to the broader Middle East/North African (MENA) region, impacts on fertiliser supply – as well as grain, meat, and dairy demand – could be notable,” he said.
Israel is an important exporter of potash and phosphorus, exporting 6% of the world’s potash and 8% of its phosphate fertilisers in 2022.
It remains to be seen how much of those trade volumes will be impacted in the coming months.
The broader MENA region accounts for about 30% of the world’s nitrogen fertiliser exports, more than 25% of global mixed fertiliser exports, 10% of potassic fertilisers and almost half of the phosphatic fertiliser exports.
In New Zealand, tight margins and ongoing elevated costs for other farm inputs mean it is doubtful that farmers will lift their fertiliser usage despite prices coming off their highs, Pistoia said.
“And a key question is how much the recent drop in the New Zealand dollar will offset the reduced cost of fertiliser in farmers’ budgets.
“When this lower dollar is combined with the recent crude oil hikes, how much is left in those budgets to increase fertiliser application rates?”
While 2024 is still some months away, this year has been a much calmer year for the fertiliser market and 2023 can be seen as a transition year, even with some remnants of all the market complications from 2022, Pistoia said.
The bank’s models indicate a recovery in global fertiliser usage in 2023, up by around 3%, compared to the 7% drop in 2022.
For 2024, Pistoia said the initial analysis suggests an increase in global fertiliser use of close to 5%.
“All this is aligned with our affordability index, which shows a much higher value than a year ago.”