Global fertilizer prices expected to remain low over second half of 2020

It’s no secret that COVID-19 has had an impact on the cost of raw materials and energy prices.

Due to the plummeting cost of raw materials, growing production capacity, and mediocre demand, there have been pressures on the global price indicators of nitrogen, phosphate, and potash to fall either to or near ten-year lows.

According to Rabobank’s Semi-Annual Global Fertilizer Outlook, decreasing energy prices have been one of the biggest impacts of COVID-19 on the fertilizer complex.

Reduced mobility and restrictions have forced prices of natural gas and coal down 46 per cent, and 11 per cent, respectively. Both of these raw materials are critical to the production of urea and processed phosphate.

Late in the first quarter, uncertainty created a lift across most international price benchmarks. Matheus Almeida, senior analyst of farm inputs, says this price trend is expected to stick around.

“We expect that there is little upside for prices over the next six months across the nutrient complex. With relatively cheap inputs, utilization remaining at low levels, and our outlook for commodity prices also staying low, we expect this low price environment will continue for at least the next six months,” Almeida explains.

A COVID-19-related interruption to global production and/or supply chains remains the most prominent risk for fertilizer prices over the next six months, and at the farmgate, this may lead to sharp, short-term price rises, if shortages arise.

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