Fertilisers represent a key expense for farmers and, given Australia has a high reliance on imported fertiliser, global events which alter the supply and demand matrix can have a pronounced impact on domestic prices.

RaboResearch analyst Paul Joules said, of the three main fertilisers, phosphate prices represent the worst value when compared to average historical prices. “Di-Ammonium Phosphate (DAP) prices are hovering around AUD 950/tonne (Morocco Bulk Spot price) – the highest level since March 2023,” he said.

“We can attribute current high DAP prices to tightening global supplies,” Mr Joules said. “Three of the main phosphate exporters – China, the US and Morocco – have all made alterations to their export strategies. On the one hand, the US is reducing both MAP (Mono-Ammonium Phosphate) and DAP supplies, and Chinese phosphate exports have been trending lower over the past five years. Meanwhile, Morocco is increasing DAP/MAP exports, but lowering phosphate rock exports.”

Mr Joules said the decline in phosphate supplies from the major exporters is only being partly offset by an increase in supplies from other producers, such as Egypt, Peru and Jordan. As a result, global phosphate supply is limited, and prices are reflecting that.

“The silver lining for Australian farmers is that prices are not just high here locally – this is an issue impacting most regions in the world, and Rabobank’s ‘fertiliser affordability index’ shows phosphate prices represent poor value (in terms of return on outlay, when factoring in farm output prices),” Mr Joules said. “This should help temper global demand for phosphate fertilisers, and ultimately place a cap on upside for prices. That said, the likelihood of a downside in phosphate prices also seems limited given the tight supply picture.”

The Rabobank analyst said for urea, prices continue to be very volatile having reached AUD 528/tonne on October 24 this year, before settling back down to around AUD 496/tonne (as of November 14). “We can partially attribute recent price volatility to uncertainty regarding global demand. A recent large tender by India has sent a signal to the market that demand from the key importer is starting to pick up.”

Mr Joules said on the supply-side, tensions in the Middle East have added a risk premium to urea prices, as LNG (liquid natural gas) flows could be disrupted in the event the situation escalates further. “Meanwhile, strong European demand, alongside concerns regarding Russian supplies, have helped push natural gas prices to a yearly high – which is driving up the cost of production.”

Adding to the supply concerns, he said, China has exported a miniscule volume of urea in 2024 in comparison to its typical export volume, in order to cool domestic pricing. It’s unclear when China will return to more ‘normal’ export levels.

Mr Joules said for potash, prices are comparatively more affordable given they are trading below the pre-Russia/Ukraine war five-year average, with prices currently around AUD 420/tonne. “The global supply picture is much stronger in comparison to phosphate and urea markets, given strong trade from Russia, Belarus and Canada,” he said.

The US dollar rally (and subsequent AUD decline) that has been taking place over the past month amid the ‘Trump trade’ certainly hasn’t been helping fertiliser affordability for Australian farmers, Mr Joules said. “Imported goods, including fertilisers, have suddenly become more expensive given the AUD/USD cross is at a seven-month low. Fortunately, RaboResearch maintains the view that the AUD dollar will pick up from current lows, with our 12-month view for the AUD/USD cross at 0.72 US cents.”

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