By Nico van Burick
The outlook for fertiliser prices is currently mixed with a stronger rand helping to cushion the impact of high phosphate and potash prices. This comes after phosphates resumed an upward trend after a few quiet weeks.
Marguerite Pienaar, agricultural economist at Grain SA, says the increases indicate continued demand or supply constraints.
“On the other hand, the possible resumption of Chinese urea exports is putting pressure on nitrogen prices, which likely means this part of the fertiliser market could remain under downward pressure. Energy prices also remain low.”
She points out fertiliser is a crucial input to agricultural production and plays a significant role in determining the profitability of grain production in particular. With fluctuating prices and market conditions, it is essential that producers make informed decisions about their fertiliser purchases.
In an article in SA Grain, she says the contribution of fertiliser to input costs has increased since 2009. In 2009 it was 40% of input costs and by 2024 it had risen to 46%.
“Since fertilisers constitute such a significant part of a grain and oilseed producer’s running production costs and fertiliser prices can fluctuate significantly throughout the year, the timing of purchases can make a big difference in costs.”
According to an analysis of local and international average monthly prices between 2004 and 2024, both international and local prices are usually lowest in January, February or March. This is with the exception of international ammonia, which tends to reach its lowest level in June or July.
“There is a clear trend for prices to be highest towards the end of a calendar year,” she says. “This trend is not always to the advantage of summer grain producers, as the time of purchase and the time of use can be up to 10 months apart – with the result that interest on early purchases can negate any price advantage.
“However, for winter grain producers, who already need fertiliser in March or April, these price trends provide an ideal opportunity to purchase at lower prices.”
Pienaar says several factors are currently influencing global fertiliser prices. These include energy costs, geopolitical issues and seasonal demand.
The price of ammonia has previously fallen significantly due to lower natural gas costs, while urea prices have increased mainly due to a potential supply constraint due to US tariffs and growing demand.
Geopolitical tensions are also contributing to price increases. Disruptions from Russia and Belarus have pushed up KCL prices, while China’s export restrictions on fertilisers have also limited global availability.
The start of the planting season in the Northern Hemisphere, especially in the Americas, Europe and China, has increased demand for nitrogen-based fertilisers, such as urea and diammonium phosphate (DAP), which is supporting prices.
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