Home

Global fertiliser prices trending down: Rabobank

Aidan SmithCountryman
CBH Group's Kwinana Fertiliser Facility.
Camera IconCBH Group's Kwinana Fertiliser Facility. Credit: CBH Group/CBH Group

Fertiliser costs are trending downwards but the high prices of the last few years haven’t stopped Australian farmers from buying up due to good seasonal conditions and a 130 per cent surge in production to 72 million metric tonnes.

In Rabobank’s latest Fertiliser Outlook, Improved Affordability Ahead, analyst Vitor Pistoia said Australian farmers’ demand for fertilisers had grown despite the price rises during the past few years since COVID and the Russia-Ukraine war.

“In recent years, fertiliser demand had grown despite the price hikes, as the country enjoyed good seasonal conditions and a surge in grain and oilseed production,” Mr Pistoia said.

“Every year since 2020, grain and oilseeds yields have exceeded the previous year’s production, with 2022 winter and summer crop seasons combined reaching an historically high 72 million metric tonnes — a 130 per cent surge.

Rabobank anaylst Vitor Pistoia.
Camera IconRabobank anaylst Vitor Pistoia. Credit: supplied/supplied

Mr Pistoia said good weather driven by La Nina and investments in crop management had underpinned this “phenomenal growth”.

Apparent fertiliser demand in the same period moved from 5.4 million to around 6.6 million metric tonnes, a 21 per cent increase, according to the report.

“Although the conditions for the 2023 crop seasons are a bit different, they do not signal a reversal in the trend of historically-high cropping area and a significant application rate,” Mr Pistoia said.

“The drop in farm input prices is greater than that of improving farmers’ buying power.”

In terms of the global outlook, Mr Pistoia said farm fertiliser affordability is starting to improve across the globe, with a likely recovery in application in some regions in 2023 — although in most cases, demand will take time to return to pre-pandemic levels.

He said most fertiliser prices are gradually returning to their historical averages, after skyrocketing over the past two years due to the impacts of COVID-19 and the Russia-Ukraine war.

CSBP's second solid fertiliser load point in Esperance.
Camera IconCSBP's second solid fertiliser load point in Esperance. Credit: CSBP/CSBP

Global fertiliser prices began to trend higher in 2021 due to supply chain constraints resulting from the pandemic, and affordability deteriorated further when fertiliser prices set new record-high levels after Russia invaded Ukraine, reducing supply from the region and also resulting in higher production costs.

“Reasonable prices for agricultural commodities were the only reason fertiliser didn’t become as unaffordable as it was in 2009 during the global economic crisis,” Mr Pistoia said.

“Prices continue to remain above average for a number of agricultural commodities, due to tighter stocks.

“The combination of still-positive commodity prices and lower fertiliser prices is helping fertiliser affordability for farmers, although globally, ‘consumption’ may take two or three years to recover, and the speed of recovery will depend on how long the current positive cycle lasts.”

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails