In a recent report by Rabobank, the global fertilizer market is poised for a positive resurgence in the coming years, despite some noteworthy challenges and potential risks on the horizon. After a 7% drop in fertilizer usage in 2022 due to market complications, the outlook for 2023 shows a remarkable recovery with an estimated increase in usage of around 3%. Importantly, the impact of the Israel-Hamas war on fertilizer markets is currently considered to be minimal.
The Affordability Index, a key metric used in the report, underscores an optimistic trend for fertilizer purchasing in 2024, with expectations of nearly a 5% increase. Bruno Fonseca, Senior Analyst – Farm Inputs at Rabobank, explained, “These figures align with our Affordability Index, which shows much better conditions for purchasing fertilizers than a year ago. The index’s movements confirm our expectation of usage growth in 2023, with nitrogen growing by 2%, phosphate by 3.9%, and potash by 5%.”
While the nitrogen market faces certain challenges, particularly stemming from reduced demand by corn and wheat growers, the potash and phosphate sectors present a more optimistic outlook.
Fonseca commented on the situation: “As winter approaches in Europe, there is more uncertainty in the natural gas market, which has a direct impact on the production cost of nitrogen fertilizers. Additionally, grain and oilseed markets face some uncertainties with El Niño looming, following a few successful crop seasons in Brazil and the US.”
On the other hand, the potash market is currently experiencing a surplus in supply, while the phosphate market is on the rise due to the resurgence of Chinese MAP/DAP exports.
The report also addresses the potential impact of the Israel-Hamas conflict on global fertilizer markets. Israel plays a significant role as a supplier of phosphate and potash, accounting for approximately 3% of global phosphate exports and 8% of potash exports. Disruptions in exports could lead to price spikes, and the ongoing conflict may deter vessel operators from approaching the Mediterranean port of Ashdod, resulting in delays and added logistical costs.
Despite these potential risks, the impact on fertilizer markets is currently regarded as marginal. According to Fonseca, “Global fertilizer markets have ample availability and alternative suppliers of potash and phosphate products to offset logistical disruptions in Israel.”
The fertilizer industry is poised to navigate these challenges while maintaining a positive trajectory for growth, driven by the resurgence of demand and the adaptability of global markets.