Semiannual Fertilizer Outlook: Improved Affordability Ahead

Fertilizer affordability is starting to improve, and a rapid recovery in consumption is possible in some regions in 2023. But in most cases, demand will take a while to return to pre-pandemic levels.

Starting in the first half of 2021, fertilizer prices began to trend higher due to supply constraints resulting from the Covid-19 pandemic. Affordability deteriorated further when fertilizer prices set new record-high levels after Russia invaded Ukraine. By that time, reasonable commodities prices were the only reason unaffordability didn’t surpass the record set in 2009 during the global economic crisis. Most fertilizer prices are gradually returning to their historical averages, and in some cases, like urea, current values are below historical levels already. On the commodities side, values remain above average in some cases, due to tighter stocks. The combination of these two factors is helping affordability. However, global consumption may take two or three years to recover, and the speed of recovery will depend on how long the current positive cycle lasts.