Bearish Outlook Continues Driving Global Fertilizer Prices Lower

by Colter Brown

Rabobank says a bearish sentiment in the global markets continues driving fertilizer prices lower after an extended run of significantly higher costs. Samuel Taylor is the executive director of farm inputs research for Rabobank and says fertilizer prices have seen quite a turnaround.

“Affordability of fertilizers has basically inverted in a year,” Taylor says. “Going from one of the most unaffordable periods in a cycle, and that cycle was a long cycle, a multi-decade cycle, to one of the more affordable. And so, you’ve seen strong underlying commodity prices, corn, and soybeans, relative to what we were necessarily used to in the previous low cycle. And you’ve seen fertilizer prices come off their highs that we saw immediately after the start of the Russia-Ukraine crisis.”

Taylor says certain input prices may not have reached the bottom yet.

“I think there’s probably still a little bit of downside in some of the pricing, particularly on the potash and the phosphate, but nitrogen might be nearing the low point – partly seasonal, partly demand and improvements over the coming months. But basically, the context of this is you saw the elevated pricing as a result of the Russia-Ukraine pricing hitting some macronutrients, potash in particular, hitting real-time highs in certain geographies out of fear of supply and availability after the Russia and Belarus market. And you’ve just seen this kind of month-after-month adjustments down lower.”

Retailers are going to start building their supplies to get ready for fall applications and 2024 needs, but Taylor concludes that he doesn’t necessarily see a sharp rise in prices ahead.

“I wouldn’t necessarily assume that we’re going to see some ratchet higher in pricing because there’s still a decent amount of global availability of all these products. In the high fertilizer price environment, farmers do adjust their practice where possible. They might do soil testing, they might put a lower volume down, and they might farm with all the agronomic flexibility that they’re allowed to. And so, this caused, inventory to build up in the global supply chain. And on the potash and phosphates, we still have to deal with that a little bit. So maybe we’re nearing the floor. Maybe we start to see some upward momentum in pricing over the next two months. It might not be tomorrow. It might be two months from now we see it, but it could be more imminent.”

Looking at the fertilizer prices more locally, Shay Richter, a sales representative for Wilbur-Ellis in Northcentral Montana says that farmers are seeing a dramatic drop in nitrogen prices.

“We’re down about $250-300 from where we were this spring and $500 off of last year,” Richter says. “I haven’t seen urea with a four in front of it in 4 to 5 years.”

Richter reminds growers that with wheat prices where they are and both nitrogen and glyphosate prices falling, there’s opportunity to lock in profitability for next year.

On a 2,500 acre farm, Richter estimates $30,000 in savings on fertilizer and $60,000 in glyphosate, compared to what a grower would have had to spend last year.

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NAFB/Northern Ag Network

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