Poor affordability to pressure global fertiliser demand in 2026 – Rabobank outlook

Global fertiliser markets are entering a new phase of contraction, as rising prices begin to weigh on demand, agribusiness specialist Rabobank says in new research.

In its recently-released Semi-annual Fertiliser Outlook, the bank’s RaboResearch division says affordability of agricultural fertiliser globally – as reflected in Rabo’s Fertiliser Affordability Index – is clearly beginning to decline.

With agricultural commodity prices having largely remained stable since the start of the year, this decline in affordability is primarily due to an increase in global fertiliser prices, the report says.

Between April 2025 and the end of September 2025, fertiliser prices increased by approximately 15 per cent, RaboResearch said. Phosphates saw an increase of almost 19 per cent in the period.

While some regions of the world continue to show resilience when it comes to fertiliser demand, the broader trend points to weakening demand in 2025, and a more pronounced downturn in 2026.

RaboResearch analyst Paul Joules said with the “12-month moving average of the affordability index moving deeper into negative territory”, this confirms the start of a new downcycle in the global fertiliser market.

“This phase closely resembles the previous contraction,” he said, “suggesting the market is entering a prolonged period of reduced consumption.”

For Australia, he said, farmers continue to face persistent inflation in prices of farm inputs, including fertilisers. And with cropping operations feeling the pressure from lower prices, this could impact fertiliser applications next season, especially given phosphate and urea prices are looking less affordable.

Globe awash with grain supply

The report said commodity prices for grains and oilseeds remain under downward pressure, as the world’s “production machine” is firing on all cylinders.

In 2025, global corn, wheat and soybean production reached record levels, it said.

“Record production – particularly in major growing nations, such as Brazil and the US – is overwhelming the market with supply,” Mr Joules said, “and this is expected to keep prices depressed in the short to medium term.

“Challenges to profitability in the grain and oilseeds sector portends poor fertiliser affordability and a potential decline in fertiliser use in the coming year.”

Australia

Mr Joules said with Australian farmers heavily reliant on imported fertiliser, foreign exchange plays a major role in the country’s retail fertiliser prices.

Year to date, the report said, and taking into account currency conversion, Australian prices have increased 25 per cent for Morocco DAP (diammonium phosphate) FOB to AUD 1,215 per million tonne (mt) and 15 per cent for Vancouver spot FOB potash to AUD 515/mt, while Middle East granular urea prices eased, down three per cent to AUD 545/mt.

“Over the past 12 months, the AUD/USD cross has declined 3.9 per cent,” Mr Joules said, “and this has been a clear headwind for Australian fertiliser importers.”

Positively though, he said, RaboResearch is forecasting a modest increase in the Australian/US dollar exchange rate over the next 12 months, potentially reaching USD 0.68.

“This could provide some relief for fertiliser import prices here,” he said, “although a tight global supply and demand situation may limit the downside.”

The report said while demand for urea in Australia has been low in recent weeks, as the nation moves into the winter crop harvest period, applications were relatively strong earlier in the season.

“New South Wales, Queensland and Western Australia likely went a little heavier on urea applications, given above-average rainfall levels in parts of these states,” Mr Joules said.

“South Australia got off to a slow start, however rainfall between June and July picked up, which should have resulted in farmers maintaining normal winter crop applications. While for Victoria, inconsistent rainfall likely impacted fertiliser efficiency.”

Mr Joules said in terms of fertiliser, the focus in Australia was now shifting to summer crop applications.

“Because subsoil moisture levels across large parts of the country have been relatively good, early indicators look promising for key crops, such as sorghum and cotton,” he said. “The challenge Australian growers face is margin pressure across several key commodities, and this could impact applications.”

Regional dynamics

Regionally, across the world, fertiliser market dynamics remain volatile, the report says.

In the US, geopolitical tensions and trade tariffs are expected to disrupt the upcoming season, while European prices are likely to rise with the implementation of the Carbon Border Adjustment Mechanism (CBAM), which will see a carbon tax imposed on approximately 15 million metric tons of nitrogen-containing fertiliser imports annually.

In Brazil, farmers face tight margins and limited access to credit, although fertiliser deliveries could reach record levels in 2025, RaboResearch says.

“China is prioritising domestic supply, while India continues to play a central role in global urea trade, influencing prices with each new tender,” Mr Joules said.

Global outlook

Urea consumption is forecast to decline in 2026, the report says, following a sharp price increase that has already triggered demand contraction, particularly in Brazil where farmers are shifting to ammonium sulphate.

Phosphate prices remain high, leading to an expected four per cent drop in global consumption in 2025, with further declines anticipated in 2026. Chinese exports have fallen, while shipments from Morocco and Saudi Arabia have increased. However, overall trade volumes remain subdued, RaboResearch says.

Potash demand, which rebounded in 2024 due to lower prices, is likely to slow again in 2025 as prices rise. Brazil’s plans for record imports may partially offset declines elsewhere, but, if elevated prices persist, global demand is expected to fall in 2026, the report says.