Snapshot of global fertiliser trade

High natural gas prices, export restrictions, and Russia’s invasion of Ukraine have placed pressure on the supply and price of fertilisers. There is no indication that prices are likely to experience substantial falls in the near-term.

Global fertiliser prices are rising

Average global fertiliser prices have almost tripled since January 2020.
Most commercial cropping and horticulture operations rely on a combination of nitrogen (N), phosphorous (P) and potassium (K) fertilisers.
Nitrogenous fertilisers, such as ammonia and urea, are produced using natural gas. Rising gas prices are increasing costs for fertiliser producers, particularly in Europe, and have led to widespread production halts.
International sanctions have limited exports from Russia and Belarus.
In October 2021, China introduced additional inspection requirements for fertiliser exports. Exports have subsequently fallen to multi-year lows.

Figure 1: Price indices January 2020 - September 2022

This graph shows price indices January 2020 - September 2022. From left to right of the x-axis, US fertiliser prices are represented by maroon, Australian fertiliser import unit prices are represented by blue, and US natural gas prices are represented by light orange. January 2017 = 0 — Sources: Green Markets, ABS, Markets Insider January 2017 = 0

Figure 2: World fertiliser production and exports

This data shows world fertiliser production and exports. From left to right, the first circle is Production, with China at 25% represented by orange, USA/Canada at 16% represented by dark green, Russia/Belarus at 15% represented by light green, India at 9% represented by Navy, EU at 8% represented by purple, and Other at 27% represented by blue. The second circle is Exports, with EU at 19% represented by purple, Russia/Belarus at 14% represented by light green, China at 12% represented by orange, USA/Ca — Sources: Production: FAOSTAT, 2018-2020 avg.; Exports: TradeMap, 2019-2021 avg

World fertiliser production and export markets are concentrated.

China, India, the US, Russia, and the EU, account for 66% of world nitrogen and phosphate fertiliser production.
Canada, Russia, Belarus and China account for 80% of world potash (potassium) production.
The EU, Russia, Belarus and China account for 46% of the value of world fertiliser exports.
There are important differences across nutrient types. For example, India is a major producer of nitrogen and phosphate, but relies on Belarus and Canada for potash supplies.

World fertiliser prices have almost tripled since January 2020 text with a picture of a graph rising. Impact on food prices; rise of production cost for farmers, decrease of crop yields if fertiliser use is reduced text with a picture of plant fertiliser. Australian import prices since 2020-21 - Urea: up 122%, MAP (Monoammonium phosphate): up 120%, and Potash: up 105% text with a picture of Australia.

Figure 3: Australian fertiliser imports by financial year

This graph shows Australian fertiliser imports by financial year. From left to right of the x-axis, Value of imports ($) is represented by blue, Volume of imports (kgs) is represented by maroon, and Average import unit value is represented by light yellow. — ABS, 2022 and ABARES Agricultural forecasts and outlook, September pp. 3-4

Impact of high global prices on Australian fertiliser imports

Figure 3 shows the volume of Australian fertiliser imports in 2021-22 was slightly down compared to 2020-21, but still at high levels.
The value of imports increased from $2.5b in 2020-21 to $4.9b in 2021-22. This is due to a 110% increase in average import unit value.
Ongoing high import volumes in 2021-22 are a good sign for Australian fertiliser supplies and indicate that Australian farmers are applying fertiliser at the same rate, despite high fertiliser prices.

How do price rises in Australia compare to the rest of the world?

Figure 1 shows the relative price increases of fertiliser in North America, Australian fertiliser imports, and US natural gas.
Australian import prices were slower to rise due to Australia’s limited imports from Russia and Belarus, seasonality, and the time lag between production overseas and imports entering Australia.
Australian prices are now beginning to converge with global prices.

Outlook for fertiliser prices

There is no indication that fertiliser prices will experience substantial falls in the near-term.
Natural gas prices are likely to rise further during the European winter, particularly following the closure of the Nord Stream 1 pipeline.
Neither export restrictions by China nor sanctions on Russia and Belarus are scheduled for removal.
High prices are encouraging new investment in fertiliser and natural gas production, including in Australia. However, these projects will have a limited impact in the short-term.

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