With global turmoil and commodity prices not keeping pace with fertilizer prices, RaboResearch is forecasting a global transition to tougher affordability in the second half of 2025.
Country-by-country, the only major market the firm sees a decline in demand in is India. Otherwise, demand is stable across Africa, Australia, South America, Europe and the U.S.
Phosphate supply is in the spotlight as global dynamics, including China’s limited exports in the first half of 2025, are restricting overall tons, which in turn are also impacting nitrogen fertilizers.
Per the report’s author Bruno Fonseca: “Farmers will struggle with reduced purchasing power for these nutrients, which may not immediately result in demand cuts in 2025, but the negative affordability index will eventually lead to such reductions.”
Here are key takeaways from the report, which can be found in full here.
1. May 2025 could be the start of a new cycle and demand contraction
RaboResearch assembled a monthly fertilizer affordability index, which turned negative in January 2025. However, the firm says it can’t say there has been a cycle transition without looking at the 12-month moving average. Which means, per their forecasts, May 2025 will mark the end of the cycle that started in November 2021.
2. Lower supply keeps phosphate prices elevated above average
Phosphate’s affordability index had its 12-month average turn negative in August 2024, and it’s projected to remain there until at least August 2025. This year started with the Q1 average phosphate price 27% higher than the previous 10-year average.
Per RaboResearch’s analysis, the longest the phosphate affordability index has remained negative is 18 months (June 2021 to November 2022). The firm’s current forecast has the negative index rating persisting to set a new record.
3. Nitrogen consumption continues to climb; global market has been reactive to trade activities
Nitrogen’s affordability index is negative, but comparatively better than phosphate’s, as peak demand in the northern hemisphere is over.
Natural gas prices have been lower through 2024, and RaboResearch expects those prices to be slightly up in 2025.
The global market has been closely monitoring India’s purchase of urea, which was a 24% reduction in imports in 2024 compared to 2023. Globally, urea has had a 13% price increase in the first quarter of 2025.
In January 2025, the U.S. imported 14% more urea to support the forecasted corn acres.
China is expected to re-enter the international market after its spring application season concludes.
4. The one macro nutrient with a positive index is potash, and it’s forecasted to remain stable.
While potash supply is only sourced from a few specific geographies, and one of those being 86% of U.S. used potash sourced from Canada, the RaboResearch team expects to see the Trump White House including them in some kind of tariff carve out. However, beyond the 2025 season, which already has most of its material stateside, RaboResearch is carefully watching tariffs imposed on Israel, Germany and Russia.
In the previous year, potash has traded below the historical average.
For this year, Brazil is showing strong demand after having a 18% increase to imports from 2023 into 2024.
5. Specific to fertilizer and tariffs, there are a few fronts to watch:
- If fertilizers will remain part of the USMCA agreement and not have tariffs tacked on exports from Mexico and Canada coming into the U.S. has set to be seen.
- Potash exporters had seemingly inconsistent treatment as Canada and Russia were exempt, but Israel, Germany, Jordan and Chile received a 10% tariff. Those four countries add up to 5% of potash imports.
- Nitrogen sources for U.S. used product vary, and tariffs are a focus for countries like Trinidad and Tobago, which supplies 25% of UAN used in the U.S.
- In the past five years, Saudi Arabia has grown from providing 10% of MAP imports into the U.S., to now supplying closer to 30%, therefore a 10% tariff will be noticeable.
- RaboResearch says a shortsighted relationship with Russian fertilizer suppliers could provide price relief to U.S. farmers.
