Report co-author and RaboResearch farm inputs analyst Vitor Pistoia said overall, farmers around the world may feel some negative impact due to potentially rising costs of energy and fertilisers, at the margin, as well as slightly lower import demand and prices for grains and oilseeds due to the Israel-Hamas conflict.
“However, if the conflict spreads to the broader Middle East/North African region, impacts on fertiliser supply — as well as grain, meat, and dairy demand — could be notable,” he said.
The bank’s models indicate a recovery in global fertiliser usage in 2023, up by around three per cent, compared to the seven per cent drop in 2022.
For 2024, Mr Pistoia said, the initial analysis suggests an increase in global fertiliser use close to five per cent.
“All this aligns with our affordability index (which tracks the cost of fertiliser relative to the prices achieved for grain and oilseeds), which shows a much higher value than a year ago.”
The index’s movement reflect the bank’s expectation for usage growth for 2023, Mr Pistoia said, with nitrogen usage growing two per cent, phosphate 3.9 per cent and potash five per cent.
Australian fertiliser outlook
“Across the country, there is a wide variety of crop and pasture conditions,” Mr Pistoia said.
“And while there is still room for improvement, or even deterioration of conditions in the paddocks, some elements are already consolidated and will set the tone for fertiliser demand for the coming season.”
He said the bigger picture is positive for Australian farmers buying fertiliser, with prices coming down “massively” since mid-2022.
“And the past seasons have been good in terms of performance so there has been reasonable cash flow throughout agricultural supply chains.”
However, there are “still major question marks to address before filling up the sheds (with fertiliser) again”.
“Firstly, how will this season end? Undoubtedly, some regions of the eastern states will reduce application rates due to the current dry seasonal conditions, as well as pockets in Western Australia are also experiencing dryness,” he said.
“Increased fertiliser demand might come from South Australia, Victoria and southern NSW, which have fair to good crop conditions.”
The other major question, Mr Pistoia said, was how much the recent drop in the Australian dollar would offset the reduced cost of fertiliser in farmers’ budgets.
“And when this is combined with the recent crude oil hikes, how much is left in those budgets to increase fertiliser application rates?”
Mr Pistoia said there was a constant challenge for Australian farmers to find the right soil nutrition point, and this had been stretched in the past three seasons after consecutive bumper grain harvests.
“The 2022 season saw a drop of 30 per cent for phosphate fertiliser application, and 31 per cent fall of potash usage in Australia — due to high fertiliser prices and international logistics challenges.
“The application of these two nutrients should bounce back for the 2023 season and especially for the coming 2024 season. As fertilisers should be more affordable and the soil needs it to balance the nutrient extraction of the recent good yields.”
