Rabobank predicts a decrease in demand for nitrogen and phosphate fertilisers during the upcoming planting season
Rabobank’s Global Fertiliser Outlook report predicts an overall reduction in demand for fertiliser in the upcoming Australian planting season, despite recent trends which had seen fertiliser application increasing.
RaboResearch analyst Vitor Pistoia says the agribusiness bank expects a nutrient reduction of approximately seven per cent for the season ahead, driven in part by a squeeze on operating margins caused by lower commodity prices.
The report says in the two years to 2022, farmers’ crop management programs had focused on the application of nitrogen, the nutrient with the highest correlation to potential yields and the fastest payback.
During this period, nitrogen demand had expanded 25 per cent, with phosphorus only seeing a three per cent increase.
At the same time, the report says the Australian winter cropping area – which represents the sector with the largest fertiliser usage – grew by 21 per cent.
Pistoia says the outlook for the 2024/25 season will be more challenging, with lower grain and oilseed prices and lower soil moisture levels prompting a change in crop rotation programs.
This in turn will lead to lower fertiliser application, he says, with a decrease in nitrogen application and a similar drop in the use of phosphate fertilisers.
Despite these challenges, Rabobank says there are some indicators that are supporting fertiliser demand in Australia, with a rebound in other commodities contributing to the demand outlook.
Rabobank’s report says the other commodities contributing to the outlook include beef, where prices were rebounding, and dairy, which was going through a positive demand cycle.
“Cotton and sugarcane prices also remain favourable and crop conditions look promising,” Pistoia says.
“Vineyards could see a surge in demand following China’s decision to remove tariffs on Australian wine.”