High global fertiliser prices are testing the affordability of some fertilisers for a number of key agricultural-producing countries around the world.

RaboResearch farm inputs and commodities analyst Paul Joules said the bank’s in-house global fertiliser affordability index shows some fertilisers have moved into what is considered unaffordable territory for some nation’s farmers, with both nitrogen and phosphates now considered “unaffordable” by the index, with potash the only fertiliser still classed as affordable.

Mr Joules said fertiliser prices are up across the board in AUD terms, with urea up 11 per cent, phosphate 5 per cent, and potash up 8 per cent year-to-date.

“The potash market appears well supplied globally,” Mr Joules said, “which is helping to keep prices in affordable territory”. However, he said this level of affordability is attracting buyers, “and this largely explains the increase we’ve seen in prices year-to-date”. Brazil and the US are two of the key countries that have capitalised on weaker prices over the past 12 months, having increased imports year-on-year. Mr Joules said current prices appear low enough to continue to attract a strong level of demand from key international buyers. “Nevertheless, robust global supplies look likely to prevent the global market from tightening further.”

The Rabobank analyst said phosphate prices (DAP) are currently trading 11 per cent above the 12-month average, as high global demand, alongside elevated production costs, is reducing global supplies and lifting prices higher. “Supply headwinds appear likely to persist throughout much of 2025. Because of this, RaboResearch anticipates the phosphate market to remain tight.”

However, he said, given that phosphates are considered the most unaffordable fertiliser globally, a drop-off in global consumption is expected, which could potentially help to address the tight supply and demand picture.

Mr Joules said for Australian farmers, urea prices are in focus for the Australian winter crop, as producers seek to secure volumes for top-dressing applications. “Global events over the coming months have the potential to influence pricing. One of the key drivers causing sharp volatility in recent months is India’s purchasing activity.” In March, he said urea prices began to track down as an anticipated Indian urea tender failed to materialise. “However, India has recently re-entered the market, and once again secured volumes. This was enough to push urea prices back up, as the global supply and demand picture appears to have tightened. Should India come back into the market in the coming months, prices have the potential to push higher again; however, another prolonged period of absence may have the reverse effect.”

Another key factor that could influence urea prices over the coming months is China’s export policy, Mr Joules said. “The country, which typically exports strong volumes of urea, has been largely absent from the export market since the start of 2024. The reduction in exports is to protect domestic pricing. Although it’s unclear when normal exports will resume, we could potentially see China increase exports in the second half of the year, as domestic demand typically cools after the spring applications. If China returns to the international market, it may help prevent further price increases from current levels; however, this remains uncertain.”

Mr Joules said another factor driving up not just the price of fertilisers, but all imported farm inputs, is the weakening of the Australian dollar against the US dollar. “RaboResearch anticipates the AUD/USD exchange rate to remain weak over the next 12 months, with the cross forecast pegged at USD 0.65. Because of the relatively weak FX rate expectations going forward, the downside potential for imported goods (such as fertilisers and agrochemicals) appears fairly limited.”

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Rabobank Australia & New Zealand Group is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 125 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 87 branches throughout Australia and New Zealand.