Fertiliser market to recover despite Israel-Hamas war, Rabobank says

The global fertiliser market is set to recover despite potential disruptions due to the Israel-Hamas war, according Rabobank.

The outlook for the global fertiliser market is positive in the coming years, with some challenges and potential risks to be monitored, the banking firm's report says.

The market is recovering, with an estimated increase in usage of around 3% in 2023 following a 7% drop in 2022 due to various complications in the market.

Regarding disruptions due to the latest Israel-Hamas war, the impact on fertiliser markets is seen as marginal at this stage.

The report highlights the positive outlook for fertiliser purchasing in 2024, with an expected increase of close to 5%.

Bruno Fonseca, senior analyst at Rabobank, said: "These figures align with our Affordability Index, which shows much better conditions for purchasing fertilisers than a year ago.

“The index’s movements confirm our expectation of usage growth in 2023, with nitrogen growing 2%, phosphate 3.9%, and potash 5%.”

While the nitrogen market is facing challenges with lower demand from corn and wheat growers, the potash and phosphate outlook is positive.

“As winter approaches in Europe, there is more uncertainty in the natural gas market and related uncertainty in the production cost of nitrogen fertilisers,” explains Fonseca.

Grain and oilseed markets also face some uncertainties, Rabobank's report says, with an El Niño at the doorstep after a few good crops in Brazil and the US.

On the other hand, the potash market is going through a period of ample supply, while the phosphate market is on the rise with the return of Chinese MAP/DAP exports.

The report also highlights the potential impact of the latest Israel-Hamas war on global fertiliser markets.

Israel is a sizable supplier of phosphate and potash, accounting for around 3% of phosphate exports and 8% of potash exports globally.

Disruptions in exports could cause price spikes, and the conflict may discourage vessel operators from approaching the Mediterranean port of Ashdod, causing delays and additional logistical costs.

Despite these potential risks, the report explains that the impact on fertiliser markets is seen as marginal at this stage.

"Global fertiliser markets have sufficient availability and sufficient alternative suppliers of potash and phosphate products in case of logistical disruptions in Israel," Fonseca says.