Global Fertilizer Outlook - 1

OMAHA (DTN) -- While global fertilizer supply generally stabilized in 2024, there were some supply issues that pushed prices higher during the year. The world outlook in 2025 for nitrogen fertilizers appears to indicate a more stable supply, which could mean less price volatility.

However, there are some concerns that could negatively affect nitrogen prices in 2025, including uncooperative weather and continuing geopolitical issues in the new year.

CONTINUING RECOVERY IN GLOBAL N MARKET

Global fertilizer consumption (nitrogen, phosphorus, potash) is forecast to have increased by 4% in 2023 and by 3% in 2024, according to the Summary Report Medium-Term Fertilizer Outlook by the International Fertilizer Association (IFA) (https://www.fertilizer.org/…). This comes after declines in consumption in the two previous consecutive years because of high prices. The report was released in 2024 and covers "fertilizer years," which run from January of one year to January of the next year for some countries but run from mid-year to mid-year for other countries.

Consumption is forecast to reach 203.7 million metric tons (mmt) of nutrients in 2024, slightly above the previous record reached in 2020. This recovery can be explained by improving affordability since prices reached their peak in May 2022, according to IFA.

However, the recovery in global fertilizer use has not been equally shared between the three major nutrients. Nitrogen consumption fell by 2.7 mmt (minus 2%) between 2020 and 2021, but in 2024, nitrogen usage should be about 2% above its 2020 levels.

Global fertilizer supply increased across the board in 2023, IFA reported.

Global ammonia output is estimated to have reached 185.6 mmt in 2023, up by 2% compared to 2022. Urea production is expected to have increased considerably to reach 195.5 mmt in 2023, up 6% compared to 2022.

Mark Milam, senior editor for fertilizers for Independent Commodity Intelligence Services (ICIS), told DTN the outlook for nitrogen fertilizers globally in 2025 is positive in general.

Nitrogen did have some supply issues in 2024, specifically higher natural gas prices in Europe curtailing some nitrogen fertilizer production there. Natural gas is the base ingredient for ammonia.

There was also less ammonia supply out of Trinidad during the year, but Milam noted that by October and November, a better supply returned from Trinidad.

"Nitrogen looks to be a well-balanced situation right now as we approach the end of the year," Milam said.

N DEMAND EXPECTED TO SAY STRONG IN 2025

Nitrogen fertilizer appears to be a better situation going forward, Milam said. Good demand for nitrogen appears to be there, as many analysts predict anywhere from 92 million to 94 million acres of corn will be planted in the United States in the next growing season.

Josh Linville, vice president of fertilizer for StoneX, told DTN he believes nitrogen supply issues could lessen some in 2025 compared to 2024.

Another issue for nitrogen this year was that supply from Egypt went offline this summer because of natural gas price concerns. This production has returned to the global market, which will help supply, Linville said.

World nitrogen prices rose in 2024 because they were influenced by these various nitrogen supply issues internationally that limited tons from entering the market, Linville explained.

"I think we will see some of these supply issues being ironed out in 2025," Linville said.

Samuel Taylor, Rabobank analyst for farm inputs, noted there also looks to be a higher nitrogen fertilizer supply from domestic producers in 2025.

U.S. ammonia production was estimated to be 14 mmt in 2023, with approximately 88% of domestic ammonia consumption targeted for fertilizer use, according to the National Minerals Information Center. Expansion in U.S. ammonia production could increase 2% during the next five years.

While nothing is set in stone, having more nitrogen fertilizer from domestic producers will certainly help with these supply issues, Taylor said.

"This would certainly be a good situation for U.S. growers," Taylor said.

SOME NITROGEN SUPPLY CONCERNS REMAIN

Taylor said price affordability in the nitrogen market remains somewhat low currently. The nutrient remains expensive when factoring in both nitrogen and commodity prices, he said.

Unlike phosphorus and potash fertilizer applications, which can be limited some, nitrogen is not a nutrient farmers can cut back on if they want to maintain high yields. Until nitrogen prices decline some, affordability will remain an issue, he said.

Some global supply issues could linger in 2025, due to the various military conflicts around the world.

Justin Rackleff, Americas fertilizer markets lead for London-based CRU, pointed out that 51% of urea exports come from the Middle East, a region with much conflict. Isreal has been battling Hezbollah and potentially Iran as well.

Much nitrogen supply also comes from the Black Sea region, where Russia and Ukraine continue their military conflict. Both countries export fertilizer into the global fertilizer market, with Russia the largest fertilizer exporter in the world.

An escalation or expansion of these military conflicts would obviously have a direct effect both on nitrogen fertilizer supply and potentially higher prices, he said.

"These issues still exist today," Rackleff said.

MORE SUPPLY GOOD NEWS FOR N PRICES?

While generally a larger nitrogen fertilizer supply in the global market is good news for nitrogen fertilizer prices, there are many factors that will ultimately affect where nitrogen fertilizer prices will be in 2025.

Milam is watching fall nitrogen fertilizer application in the U.S. Corn Belt as an important factor in where prices could be at the beginning of the 2025. If less is applied this fall, this could cause some supply to be carried over into the spring by retailers.

"I think in Q1, nitrogen prices will hold pretty steady; it just depends on how much nitrogen gets put on this fall," Milam said.

Prices could climb some in the spring as demand returns to the market, he said.

Linville said he believes prices will stay in this same range into 2025. There is not much price movement to the downside for nitrogen fertilizer, but there could be $50/ton to the high side.

"It really is hard to call right now," Linville said.

Rackleff said where nitrogen fertilizer prices move in the new year could also depend on the form of nitrogen. Different forms could be more expensive, he said.

Anhydrous could see some lower prices in 2025, but urea could see some price increases into the new year. UAN, meanwhile, looks to be stable in 2025.

Anhydrous looks to have less pressure on the market compared to urea, Rackleff noted.

"Those producers who upgrade to urea might see some higher prices," he said.

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Editor's Note: This is the first of three stories in DTN's special Global Fertilizer Outlook series. To see DTN's weekly column on Retail Fertilizer Trends, check out https://www.dtnpf.com/….

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

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