Global Fertilizer Outlook - 2

OMAHA (DTN) -- The global phosphorus fertilizer market had some supply issues in 2024, which pushed world nutrient prices higher. These issues are most likely not going to go away in 2025, clouding the outlook of the fertilizer.

Issues linger both on the global market, as well as domestically for the market in the United States. Lack of exports from some countries, most notably China, limited supply while countervailing duties on phosphorus fertilizer imports into the U.S. has also weighed on the market.

Fertilizer analysts say the affordability of phosphorus fertilizer is the least positive of the three major nutrients farmers use and this situation may not change into the New Year.

SOME GLOBAL P RECOVERY SEEN

Global fertilizer consumption (nitrogen, phosphorus, potash) was forecast to increase 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/…), released this summer. This comes after declines in consumption in the prior two years.

Consumption was forecasted 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.

The recovery in global fertilizer use has not been equally shared among the three major nutrients. Phosphorus fertilizer use fell by 6.2 mmt (minus 15%) between 2020 and 2021, and recovery was expected to be 5.4 mmt or 16% in 2023.

Fertilizer supply increased across the board in 2023, IFA reported.

Phosphoric acid production was estimated to have increased 1%, to 85 mmt, in 2023 while total MAP-DAP production was estimated to have increased by 3% year-over-year to 64.3 mmt. Despite the partial recovery, global MAP-DAP production did not return to 2020 levels following three years of decline, according to the IFA report.

It is not all negative news regarding global supply, however. World fertilizer capacities are expected to rise in the coming years.

IFA reports phosphoric acid capacity is expected to increase 10% between 2023 and 2028, reaching 70.6 mmt globally. Capacity expansions are mainly expected to come from existing producers in Morocco and Saudi Arabia.

LACK OF CHINA P SUPPLY WORRISOME

Samuel Taylor, Rabobank analyst for farm inputs, told DTN the smaller global supply of phosphorus fertilizer pushed nutrients prices higher in 2024. Combined with lower commodity prices, this pushed nutrients into the less affordable range, he said.

Until these issues are solved, phosphorus fertilizer supplies are going to be limited.

"We expect to see sustained tight supply global in 2025," Taylor told DTN.

Josh Linville, vice-present of fertilizers for StoneX, said he has some major worries about the global phosphorus market. A combination of factors has brought these supply issues to the world market, he said.

At the top of the list is China continuing to limit phosphorus nutrients out of its country, he said. China limited exports in recent years to ensure its Chinese farmers have enough domestic supply as prices begun to rise.

This policy, however, has severely affected the global P market because China was a major exporter of P fertilizer. Linville said in 2020 the Chinese phosphorus fertilizer exports totaled around 9 mmt to 9.5 mmt. Through October 2024, this year's total was only about 5.4 mmt.

"This is a massive missing piece," Linville said.

Justin Rackleff, Americas fertilizer markets lead for London-based CRU, said it appears Chinese phosphorous fertilizer exports will not return to these higher levels anytime soon. CRU expects Chinese fertilizer exports to stay in the range of 7 mmt to 7.5 mmt over the next few years, he said.

This comes at a time when some countries, including India and Brazil, want to increase their access to phosphorus nutrients, Rackleff said.

"These supply issues are not going away anytime soon," he said.

Mark Milam, senior editor for fertilizers for Independent Commodity Intelligence Services (ICIS), said the lack of Chinese phosphorus exports should be viewed as a long-term situation. While it is often difficult to fully assess what is happening in China, it appears the country wants to continue to stockpile this nutrient for domestic usage long term, he said.

"I think everyone is going to have to learn how to survive without this Chinese supply because they are not coming back anytime soon," Milam said.

COUNTERVAILING P DUTIES BATTLE CONTINUES

The other major supply issue which affects phosphorus fertilizer in the U.S. is countervailing duties on P imports from global producers. This multi-year row has pitted U.S.-based Mosaic against producers from Russia and Morocco, and so far, U.S. government agencies have upheld these duties, increasing the cost of imports into the U.S.

While a final ruling has not been issued yet, it appears short of a complete policy reversal; these duties on phosphorus imports will not go away anytime soon. This then raises the price U.S. farmers must pay for this nutrient.

Rackleff said a final ruling could be made by June 2025 after administrative reviews continue. He noted the chance these duties will be reversed is extremely low.

"Usually after all of this process, they do tend to stick with the previous rulings," Rackleff said.

Linville said an interesting side effect of these countervailing duties is global phosphorus producing companies in Russia and Morocco have discovered they can sell more nutrients to other countries. For many years, these producers focused much of their attention on just the U.S. market, he said.

Countries such as Brazil and India are seeing increased supply coming from these companies as less is shipped to the U.S. This is good news for Indian and Brazilian farmers -- but bad news for U.S. farmers, he said.

P PRICES NOT EXPECTED TO MOVE MUCH

Where phosphorus fertilizer prices will be in 2025 is a bit unknown. Fertilizer analysts believe prices could be mostly steady as the new year begins, but where they go after that is hazy.

Taylor believes there could be some risk to the downside with phosphorus in 2025. There could be some tightness of supply in the global market, and this could have prices flat in early 2025, he said.

Milam said he thinks prices will begin the new year fairly steady. Then, as farmers progress into spring, there could be some higher prices with increasing seasonal demand.

"I think commodity prices, specifically corn, might have some effect on where phosphorus prices could be as well," Miliam added.

Rackleff said global phosphorus prices could be at a ceiling right now. Any downside price movement is probably limited, he said.

The only thing he could see in the near term which might change this outlook would be the countervailing duties being reversed, which would push prices lower. However, this is somewhat unlikely, he said.

An increase in domestic phosphorus fertilizer production is improbable as well. U.S. domestic phosphorus fertilizer production is down 9% year-on-year, he said.

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Editor's Note: This is the second of three stories in DTN's special Global Fertilizer Outlook series.

See Global Fertilizer Outlook - 1, " Nitrogen Supply Expected to Increase in 2025, Positive News for Price," https://www.dtnpf.com/…

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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