Prices for the three major fertilisers used by Australian farmers – nitrogen, phosphates and potash – have gradually eased from the highs seen in 2022, following the sharp spike in global fertiliser prices with the outbreak of the Russia-Ukraine war.

And although prices remain high against historical levels, agribusiness banking specialist Rabobank expects muted global demand from across the fertiliser market to “seep into prices within the coming six months” – with the weaker demand helping to offset global supply issues and keep fertiliser prices in a tight range.

However, the bank cautions in its semi-annual Global Fertiliser Outlook report, global fertiliser markets are likely to remain volatile in the year ahead. 

Report co-author and RaboResearch agriculture analyst Paul Joules said fertiliser prices became extremely high, extremely quickly – but have begun to slowly flatten out.

“It has been like going up by escalator but coming down via the stairs in terms of the pace of the price correction,” he said.

Mr Joules says Australian farmers are hugely dependent on other countries for fertiliser supply – with very little of the chiefly-used fertilisers manufactured locally.

“International supply and demand issues have a direct impact on Australian fertiliser prices and ability to procure fertiliser.

“As a relatively small player in the global buyer market – Australia is not in a position to dictate prices.”

2025 price outlook

Mr Joules said Australian farmers can expect to be dealing with a volatile global fertiliser market in the year ahead.

From an Australian purchasing perspective, there is a positive outlook for the Australian dollar, he says. The bank anticipates the exchange rate between the Australian dollar and the US dollar to rise to 0.72 during the next 12 months.

He said if this materialises, it will make fertiliser purchase more affordable.

“The strength of the Australian dollar and waning global demand point towards lower prices for Australian farmers. However, ongoing global supply-side issues for nitrogen and phosphate fertilisers will likely limit downside potential.”

Mr Joules said phosphate and potash usage rates are strongly correlated to price.

“A modest increase in phosphate price may curb usage, while the decline in potash price could incentivise slightly more usage,” he explains.

“It’s important to remember that this is happening against a backdrop of declining grain and oilseed prices, high interest rates and high machinery costs in Australia.

“Negative sentiment surrounding these pressures could impact fertiliser application decisions.”

Nitrogen

There is no clear direction for global nitrogen prices.

The urea (a source of nitrogen) market lacks a clear short-term direction, leading to potential overreactions in prices, either upwards or downward.

“We should continue to expect price volatility, a common pattern in the nitrogen market,” Mr Joules says.

Phosphate

There is a clear shift in global phosphate market dynamics, ultimately leading to a reduction in supply.

“As the market struggles to adjust to lower supply, phosphate prices are likely to remain above the historical average, impairing demand.

“A lack of clear strategies from the top three exporters – China, the US and Morocco – is playing an important role in this tight supply situation.”

Potash

For potash, heavy supply continues to keep international prices close to the floor.

“Potash prices have continued to decline, remaining below the historical average in most regions,” the report says.

“Current potash prices are at the same levels observed between 2020 and 2021.”

The bank expects the market is approaching the price floor.