Semiannual fertilizer outlook: A new cycle ahead, ushering in demand destruction

Fertilizer prices are showing an upward trend for 2025. As a result, farmers’ purchasing power is decreasing since commodity prices have not increased accordingly. All of this is happening in a world in turmoil. RaboResearch’s affordability index indicates a transition between cycles, moving from a period of relative affordability to one where fertilizers are less affordable and the index turns negative.

The year 2025 began with a range of geopolitical challenges, creating uncertainties in various markets. Agricultural inputs like fertilizers were particularly affected. We expect this unfavorable scenario for the fertilizer market to persist throughout the year. The US government has introduced new import tariffs, and ongoing global conflicts continue to contribute to the instability.

Despite all this geopolitical uncertainty, fertilizer needs remain stable in regions such as Africa, Australia, South America, Europe, and the US. India has consistently been a major buyer in the fertilizer market, standing out as a very important player in this market and ensuring necessary liquidity at times. However, seasonal demand in India has decreased, coupled with the depletion of stocks. Consequently, market activity has diminished as participants adopt a wait-and-see approach before taking any new actions.

On the supply side, we continue to observe restricted supplies of some nutrients due to changes in the global dynamics of the main players and restrictions on exports from China. We expect that China will resume exports in the second half of 2025, once domestic demand decreases after top-dressing applications are completed.

Considering the many different factors at play, the fertilizer market is expected to face yet another challenging year in 2025. This is particularly the case for nitrogen and phosphate-based fertilizers. 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.