Fertiliser supply and price challenges tipped to stay

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Order your fertilisers early, Rabobank says, as global fertiliser prices soar thanks to supply issues and strong demand

Fertiliser supply and price challenges tipped to stay
Rabobank's senior agriculture analyst Wes Lefroy says farmers should lock in fertiliser supplies early

 

Supply issues combined with strong demand have pushed global fertiliser prices to their highest level in almost a decade, Rabobank says.

Despite these pressures, the agri-bank expects Australian farmers to lock in their supplies early for the upcoming season, with no immediate relief in sight.

Rabobank’s senior agriculture analyst Wes Lefroy believes farmers will need to purchase early to ensure supplies of fertiliser and other inputs are received on time, with an early move also shielding them from further price rises.

"2022 could be one of the toughest years that retailers of agri input supplies and farmers alike have seen in recent times when it comes to acquiring inputs," he says.

"We see the production and supply of inputs being impacted by a combination of factors including weather events, the high price for raw materials, environmental regulation and freight being heavily disrupted.

"Overlaid with strong local demand, this is really ratcheting up the pressure."

Rabobank’s global fertiliser outlook found nitrogen and phosphate prices will remain high in Australia until at least March next year.

Lefroy anticipates the phosphate price levels to see some farmers purchase the "minimum amount necessary", while planned nitrogen supply capacity increases from India and Nigeria had been postponed, putting pressure on availability.

He also says ocean freight costs had resulted in price increases for the end user, tipping further challenges for profit margins despite the higher commodity prices.

"Fertiliser prices have risen much faster than local grain prices and this has considerably reduced the relative affordability of fertiliser," he says.

"Relative to grain prices, AUD-adjusted global DAP (diammonium phosphate) prices are now the highest they have been for more than 10 years.

"Indications from the Bureau of Meteorology that southern and eastern regions may experience above-average rainfall this summer could add further to farmer confidence and support summer demand for fertilisers and agri chemicals ahead of the new season."

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