Global Fertiliser Market Faces Unprecedented Challenges
The global fertiliser market is currently experiencing a period of tight supply, low affordability, and heightened price volatility. Even with a potential easing of geopolitical tensions, the process of returning to stability is expected to be gradual, according to a new report by Rabobank.
Tight Supply and Rising Prices
In its latest Semi-annual Fertiliser Outlook, Rabobank’s RaboResearch division highlights that the international fertiliser market wrapped up the first quarter facing severe pressures.
“The escalating geopolitical disruption in the Middle East, especially the blockade of the Strait of Hormuz, has significantly impacted the availability of key fertilisers and inputs. This has led to a supply shock that cannot be rapidly remedied, resulting in increased prices and enhanced volatility across major nutrients,” the report states.
Affordability Under Strain
RaboResearch indicates that by 2025, fertiliser affordability was already under strain, driven by steadily increasing nitrogen and phosphate prices. The situation has worsened dramatically since then.
“The gap between fertiliser prices and agricultural commodity prices is compressing farm margins globally, leading to urgent affordability pressures,” the report asserts.
Long-Term Forecast and Risks
As per RaboResearch’s fertiliser affordability index, the situation has decisively slipped into negative territory, with only limited recovery expected in the latter half of 2026.
Bruno Fonseca, senior analyst at RaboResearch, points out the risk of “demand destruction,” where farmers may cut back on fertiliser application or delay purchasing as costs rise.
Impact on Australian Farmers
Australian farmers are grappling with margin pressures exacerbated by the Middle East conflict, as highlighted in the report.
Paul Joules, a commodities analyst at Rabobank, emphasizes that Australia is heavily reliant on imports for critical fertiliser products, such as urea and MAP (mono-ammonium phosphate). “Due to currency fluctuations, the price of Middle Eastern granular urea has surged by 94% year to date,” he notes.
Despite this price increase, the ongoing global supply constraints continue to drive up fertiliser costs in Australia.
Future Crop Choices
With elevated prices and fluctuating grain prices, Australian farmers may increasingly turn to crops that yield better margins under variable seasonal conditions, such as barley and canola, rather than wheat.
Conclusion
Overall, RaboResearch anticipates a significant decline in fertiliser consumption across Australia as farmers adapt to the challenging economic climate by shifting their cropping strategies.
