What tight urea supplies mean for global prices and Australian farmers

Urea is by far the most widely traded fertiliser in the world, and it holds the largest share of fertiliser imports in Australia, representing 46% of the country’s total fertiliser imports in 2024. Given complex supply chains, urea prices are particularly vulnerable to supply shocks in producing countries and have a tendency to trade with significant volatility. In Australian dollar terms, prices are currently trading around the five-year average. However, if we were to compare current prices with the pre-Russia-Ukraine war five-year average price, they are 40% higher. Natural gas, the predominant feedstock for urea production, is the other key influence in markets. The sensitivity of natural gas markets to both weather and geopolitical events adds to the volatility of urea prices. In this report, we consider the key supply and demand factors that will likely influence global urea prices in 2025, such as ongoing supply issues in Europe, Iran, Egypt, and China. We also examine the potential of urea projects in Australia and the impact they may have on pricing.