According to Rabobank's report published in October 2023, global fertilizer prices are expected to stabilize in 2024, despite the uncertainty created by Israel and Palestine, following the extreme volatility and record prices in the markets in recent years.
Agricultural banking expert, in his newly published "What's next?" In the Annual Fertilizer Outlook report titled, the tension created by Israel and Palestine has some impact on the outlook for fertilizer markets.
While it creates uncertainty, he says the current impact for the food and agriculture sectors is manageable.
Rabo Research agricultural inputs analyst Vitor Pistoia, one of the report's authors, says farmers around the world may feel some negative impact due to potentially increased energy and fertilizer costs, as well as some lower import demand and prices for grains and oilseeds due to tensions between Israel and Palestine.
However, if these tensions spread to the broader Middle East/North Africa (MENA) region, the impacts on demand for grain, meat and dairy products, as well as fertilizer supply, could be significant.
The report states that Israel is a major exporter of potassium and phosphorus, exporting 6% of the world's potassium and 8% of phosphate fertilizer in 2022. We will all experience and see how much of these trade volumes will be affected in the coming months.
Approximately 30% of the world's nitrogenous fertilizer exports are carried out by countries in the MENA region. (top five exporters: Qatar, Saudi Arabia, Egypt, Oman, Algeria), more than 25% of global mixed fertilizer exports (top three: Morocco, Saudi Arabia, Israel), around 10% of potassium fertilizers (top three: Israel , Jordan, Egypt) and Morocco, Israel, Egypt, Lebanon and Tunisia as the top five countries that realize almost half of phosphate fertilizer exports.
Affordability Index
2024 is still a few months away – I would say this has been a much calmer year for the fertilizer market – and 2023 could be seen as a transition year, even with some remnants of all the market turmoil of 2022. That global fertilizer outlook report points to a recovery with a nearly 3% increase in global fertilizer use in 2023, compared to a 7% decline in 2022.
For 2024, it indicates an increase of nearly 5% in global fertilizer use. Because all these indicators show a much higher value than a year ago, Rabobank fertilizer purchases
I can say that it is compatible with the affordability index (the index that tracks the cost of fertilizer according to the prices obtained for grains and oilseeds).
According to Rabobank Fertilizer Affordability Index;
I think it reflects the usage increase expectation for 2023 and that nitrogen usage will increase by 2%, phosphate by 3.90% and potassium usage by 5%.
We know that global fertilizer markets have adequate availability and adequate alternative suppliers for potassium and phosphate products in the event of logistics disruptions in Israel. However, if these conflicts lead to delays and ship operators refraining from docking at the Mediterranean port of Ashdod and higher logistics costs, exports may be disrupted and prices may increase.
The nitrogen market is facing challenges due to declining demand from corn and wheat growers. In addition, with the approach of winter, Europe's natural gas demand becomes more uncertain and causes uncertainty in nitrogenous fertilizer production costs. Analysts are also monitoring the supply of compressed ammonia, which could lead to price increases in the coming months, the report said. Seeing a positive trend for potassium and phosphate, Rabobank states that it is going through a period when potassium supply is abundant and that the phosphate market is on the rise with the return of MAP/DAP exports from China.
In conclusion, regarding the disruptions and uncertainties arising from the Israeli-Palestinian tension, I can say that the effects on the fertilizer markets are marginal at this stage.
Kind regards,
