Global fertilizer prices ease but war could change things

Rabobank's Semi-Annual Fertilizer Outlook, titled "What is next?," indicates that while global fertilizer prices are currently easing, the escalating tensions in the Middle East, particularly the Israel-Hamas conflict, create uncertainty in fertilizer markets. The report suggests that the impact on the food and agri sectors is currently manageable, with farmers worldwide potentially facing negative impacts due to rising costs of energy and fertilizers, along with slightly lower import demand and prices for grains and oilseeds.

The report emphasizes that if the conflict spreads to the broader Middle East/North African (MENA) region, notable impacts on fertilizer supply, as well as demand for grain, meat, and dairy, could occur. Israel plays a significant role in global fertilizer exports, accounting for 6% of the world's potash and 8% of phosphate fertilizers in 2022.

The MENA region contributes substantially to global fertilizer exports, including about 30% of the world's nitrogen fertilizer exports, over 25% of global mixed fertilizer exports, nearly 10% of potassic fertilizers, and almost half of phosphatic fertilizer exports.

The report suggests that 2023 can be seen as a transition year, following the market complications of 2022. Rabobank's models anticipate a recovery in global fertilizer usage in 2023, increasing by approximately 3%, compared to the 7% drop in 2022. The initial analysis for 2024 suggests a further increase in global fertilizer use of close to 5%.

While local fertilizer prices in New Zealand are significantly lower than a year ago, the report notes that this may not necessarily lead to increased fertilizer usage on New Zealand farms. Tight farm margins due to lower commodity prices and elevated costs for inputs like fuel and feed, combined with the recent drop in the New Zealand dollar and crude oil price hikes, raise questions about the extent to which farmers can afford increased fertilizer application rates.