Fertilizer Price Support But Limited Upside

According to a recent report released by Rabobank, fertilizer prices are slowly rising from the floor prices witnessed earlier this year, driven by both intentional and unintentional supply reductions. Seasonal demand, mostly from China, India and the US, is unlikely to cause any prolonged rise in prices for the fertilizer complex. Rabobank Analyst Suzanne Pera shares more
Pera: “July onwards the fertilizer markets witness higher prices. This is due to two factors: supply contras and a pickup of seasonal demands ahead of the fall application in the Northern Hemisphere. Supply constraints are caused by intentional supply reduction through supply management and unintentional supply reduction. While we see price support as strong continuation of the bull run of the past weeks seem unlikely.”
Rabobank believes that bearish commodity prices will have limited impact on input use in the short term, while the medium-term picture could see farmers reducing fertilizer applications as margins come under more pressure.
In the United States, Rabobank believes that congested barge and rail markets are prompting increased fertilizer prices in the US.Logistical bottlenecks are likely to become the key driver for US fertilizer prices due to higher barge freight costs and rail companies struggling with backlogs. Fertilizer stocks have decreased throughout the supply chain and retailers will now be looking to replenish ahead of autumn application, leading to an increase in demand and, consequently, prices.