Global Fertilizer Outlook - 2

OMAHA (DTN) -- The outlook for phosphorus fertilizer, produced from phosphate rock, in 2024 appears to be continued demand recovery with decent supply after various supply issues in recent years. The price outlook looks to be neutral into the New Year.

Despite the positive outlook, especially compared to recent years, there are challenges to global phosphorus fertilizer markets. How much phosphorus fertilizer China decides to export will be an important factor globally while how the phosphorus fertilizer export tariffs situation shakes out in the United States will be important into 2024.

REBOUND IN WORLD FERTILIZER

According to the International Fertilizer Association (IFA), consumption of fertilizers worldwide is expected to recover by 4% in 2023 to 192.5 million metric tons (mmt). A record level of 200.2 mmt of fertilizer was used in 2020.

Worldwide phosphorus fertilizer consumption is predicted to increase by 5% in 2023 and be at 46 mmt. IFA forecasts all three nutrients (nitrogen, phosphorous and potash -- N, P and K) are expected to return to or exceed their 2019 levels but remain below the record 2020 levels.

World nutrient supplies have increased in recent years. IFA said phosphoric acid production is estimated to have increased 2% to 84.8 mmt in 2023 after a challenging 2021 in which fertilizer prices increased dramatically.

Fertilizer consumption in recent years fell globally because of affordability issues with the high price of nutrients. Rabobank estimates 2023 was a much calmer year than 2022, with global fertilizer use at a 3% increase in 2023 after a 7% decline in 2022.

The outlook for 2024 suggests an increase of close to 5% for total fertilizer consumption, according to Rabobank. With the fertilizer prices at lower price levels and affordability more positive, the world's farmers are expected to increase sales into 2024.

Rabobank said global phosphate fertilizer consumption is forecasted to be at 35.2 mmt in 2024. Phosphate fertilizer production is predicted to be 35.3 mmt, creating a somewhat well-balanced fertilizer market.

MORE P FROM CHINA?

Phosphorus fertilizer prices have dropped throughout 2023, according to Samuel Taylor, farm input analyst for Rabobank. These lower prices have helped increase demand worldwide for this nutrient this year.

More supply in 2023 has also helped. The total number of exports during the first half of 2023 was almost 20% higher than during the same period of time in 2022, according to Rabobank.

This additional supply was aided with additional P volume from China. During the first half of 2023, DAP/MAP exports by China increased 54%, jumping from 2.17 mmt to 3.33 mmt.

This was still 8% below the five-year average, but this additional supply might have played a role in lowering phosphorus fertilizer prices in 2023. Rabobank estimated MAP/DAP prices fell 30% from January 2023 to July 2023.

Chris Lawson, head of fertilizers for the CRU Group in New York, said he sees the global phosphorus fertilizer market as well-balanced as it has been for several years. While issues remain, more supply and lower prices put the market in a good spot.

China returning more tons to the export market is an important development and how much it exports will be an important factor in 2024, he explained. In 2021, China exported 10 mmt of MAP/DAP exports to the world market and in 2022 this number fell to 5.5 mmt. Lawson estimated the export number will be close to 6 mmt for 2023.

"The Chinese government is extremely sensitive to the export phosphorus fertilizer price, which is why they put various barriers to restrict exports over the last couple of years," Lawson said.

Lawson said most likely this number will be in the same range in 2024, but how much they export will play a key role in phosphorus fertilizer supply and thus price in the New Year. More supply might lower world prices while less might mean higher prices.

China remains a major player in the global phosphorus fertilizer market, Lawson stressed.

Taylor believes for the remaining part of 2023 and into early 2024, phosphorus nutrient market conditions will continue to be positive in terms of price. Rabobank's phosphate affordability index peaked in July and dropped after that time.

Signs point to a stable price environment and this trend will likely continue into the first few months of 2024, he said.

"I think we are going to see prices be fairly neutral into the New Year," Taylor told DTN.

P DUTIES BATTLE CONTINUES

A key factor in the outlook of the phosphorus fertilizer in 2024 in the U.S. could be the never-ending case of countervailing duties on phosphorus fertilizer exports into the U.S. from both Russia and Morocco.

Josh Linville, director of fertilizers for StoneX, told DTN one thing he is watching closely in 2024 will be how this case continues to move along and what will be a potential resolution.

This case has dragged on for over 2 1/2 years. In spring of 2021, the International Trade Commission (ITC), which is part of the U.S. Commerce Department, ruled a 19.97% tariff should be applied on phosphorus fertilizer from Moroccan fertilizer producer OCI Group.

In addition, tariffs were also applied toward Russian phosphorus fertilizer manufacturer PhosAgro.

The ruling made phosphorus fertilizer even more expensive for U.S. farmers. This also came during a time when retail fertilizer prices were rocketing higher, thanks to various global supply issues seen in 2021.

In early November 2023, the Commerce Department ruled to lower punitive import duties on phosphorus fertilizer from Morocco from 19.97% to 2.12% (https://www.dtnpf.com/…). The Commerce Department also raised duties on Russian producer PhosAgro from 9.19% to 28.5%.

Linville said this ruling is good news long-term for U.S. producers. More imports would allow an increase in supplies and thus lower prices, he said.

"The higher rate of duties would have made phosphorus fertilizer more expensive for U.S. farmers," Linville said.

Another ruling on the case is expected in late January or into February, he said. The conclusion of the case may stretch later into 2024.

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EDITOR'S NOTE: This is the second story in the Global Fertilizer Outlook series.

Global Fertilizer Outlook - 1 can be seen at: https://www.dtnpf.com/….

Check out the weekly DTN Retail Fertilizer Trends column, along with the monthly DTN Fertilizer Outlook, at https://www.dtnpf.com/….

In addition to national averages, MyDTN subscribers can access the full DTN Fertilizer Index, which includes state averages, here: https://www.mydtn.com/….

Russ Quinn can be reached at Russ.Quinn@dtn.com

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