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Rabobank Semi-annual Global Fertiliser Outlook: The quest for recovering lost demand

A recent Rabobank report highlights a complex scenario for the global fertiliser market – fertiliser costs are down, but so are commodity prices, squeezing farmers’ margins. Demand for certain fertilisers, such as phosphates, is experiencing a downturn. Still, the overall use of fertilisers is projected to rise in 2024, but at a reduced pace.

Globally, operating costs for farmers, especially for fertilisers, are returning to pre-Ukraine war levels, while at the same time commodity prices are falling. This combination has led to a squeeze on operating margins, which are now below the average of the past two years, making farmers more cautious about investing in their farms.

“Despite these headwinds, the fertiliser sector is showing resilience. Geopolitical factors, among other issues, could present further obstacles, yet the growth in fertiliser use is anticipated to persist,” says report lead author Bruno Fonseca, Senior Analyst – Farm Inputs at Rabobank.

Vitor Pistoia Rabobank

Australia

For Australia, the report says, an overall reduction in demand for fertiliser is expected for the upcoming season – marking a departure from the recent trend, which had seen fertiliser application rate increasing.

RaboResearch analyst Vitor Pistoia said the bank expected a total “nutrient reduction” of approximately seven per cent for the season ahead, driven by a decrease in nitrogen application and a similar drop in phosphate fertilisers.

The report said in the two years to 2022, farmers’ crop management programs had focused on the application of nitrogen, the nutrient with the highest correlation to potential yields and the “fastest payback”. During this period, nitrogen demand had expanded 25 per cent, with phosphorus only seeing a three per cent increase, while, at the same time, the Australian winter cropping area – which represents the sector with the largest fertiliser usage – grew by 21 per cent.

“The outlook for the 2024/25 season, however, is more challenging,” Mr Pistoia said, with comparatively lower grain and oilseed prices prompting a change in crop rotation programs and lower fertiliser application. Added to that, the report said, there is a “precarious soil moisture scenario”, with large swathes of the western wheatbelt having notably low soil moisture levels.

Despite these challenges, there are “some tailwinds supporting fertiliser demand” in Australia, the report said, with other commodities also contributing to the demand outlook. These included beef, where prices were rebounding, and dairy, which was going through a positive demand cycle.

“Cotton and sugarcane prices also remain favourable and crop conditions look promising,” Mr Pistoia said, “while vineyards could see a surge in demand following China’s decision to remove tariffs on Australian wine.”

 

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 120 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 approximately 8.4 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 90 branches throughout Australia and New Zealand.

Media contacts:

Denise Shaw
Head of Media Relations
Rabobank Australia & New Zealand
Phone: 02 8115 2744 or 0439 603 525
Email: denise.shaw@rabobank.com

Will Banks
Media Relations Manager
Rabobank Australia
Phone: 0418 216 103
Email: will.banks@rabobank.com