GLOBAL fertiliser prices are expected to settle in 2024, despite uncertainty posed by the Israel-Hamas conflict as it currently stands, Rabobank says in a new report.
In its October 25 semi-annual Fertiliser Outlook, What is Next?, the agribusiness banking specialist says while escalating tensions in the Middle East created some uncertainty in the outlook for fertiliser markets, the current impact for the food and agri sectors was manageable.
Report author and RaboResearch farm inputs analyst Vitor Pistoia said overall, farmers around the world might feel some negative impact due to potentially rising costs of energy and fertilisers, at the margin, as well as slightly lower import demand and prices for grains and oilseeds due to the Israel-Hamas conflict.
“However, if the conflict spreads to the broader Middle East/North African (MENA) region, impacts on fertiliser supply – as well as grain, meat, and dairy demand – could be notable,” he said.
Israel is an important exporter of potash and phosphorus – in 2022 exporting 6% of the world’s potash and 8% of its phosphate fertilisers.
It remained to be seen how much of those trade volumes would be impacted in the coming months, Rabobank said.
The bank said the broader MENA region accounted for about 30% of the world’s nitrogen fertiliser exports, more than 25 per cent of global mixed fertiliser exports, approximately 10 per cent of potassic fertilisers and almost half of the phosphatic fertiliser exports.
Mr Pistoia said: “While we are still some months away from 2024 – this year has been a much calmer year for the fertiliser market – and 2023 can be seen as a transition year, even with some remnants of all the market complications from 2022.”
The bank’s models indicate a recovery in global fertiliser usage in 2023, up by around 3%, compared to the 7% drop in 2022.
For 2024, Mr Pistoia said the initial analysis suggested an increase in global fertiliser use of close to 5%.
“All this is aligned with our affordability index which shows a much higher value than a year ago,” he said.
Local fertiliser prices were significantly lower than a year ago, but this would not necessarily lead to increased fertiliser usage across New Zealand farms over coming months.
“Farm margins are incredibly tight across the majority of New Zealand farming businesses due to lower commodity prices and ongoing elevated costs for other farm inputs – like fuel and feed – as well as higher interest costs.” he said.
“And a key question is how much the recent drop in the New Zealand dollar will offset the reduced cost of fertiliser in farmers’ budgets.
“When this lower dollar is combined with the recent crude oil hikes, how much is left in those budgets to increase fertiliser application rates?”
