Global nitrogen fertilizer prices fall 1.5 times amid weak demand

Global nitrogen fertilizer prices have dropped sharply amid weak demand from farmers and expectations of improving supply conditions. In particular, urea prices in the Middle East have fallen by about 50% to $475 per tonne, down from a peak of $918 per tonne in April, according to the Financial Times citing data from analytics firm Argus.

The decline began even before shipping routes through the Strait of Hormuz fully stabilized. Market participants increasingly priced in expectations that major supply disruptions were easing and that fertilizer availability would gradually recover.

According to Argus, the urea market has already returned to roughly pre-escalation levels seen before the Middle East tensions intensified. Seasonal factors also contributed, as farmers reduced purchasing activity after completing major fertilizer application campaigns or delaying purchases due to high input costs.

The main driver of the price decline remains weakening demand from the agricultural sector. FAO chief economist Máximo Torero noted that this is not necessarily a positive signal, as farmers in the Northern Hemisphere may have reduced fertilizer application rates following the sharp price increases.

Data from StoneX suggests that global farmers may have cut nitrogen fertilizer use by around 5%. This raises concerns for future yields, as roughly 50% of global food production depends on synthetic nitrogen fertilizers, with urea being the most widely used product.

However, not all fertilizer segments are seeing price declines. Phosphate fertilizers remain tight due to rising sulfur costs: according to Argus, sulfur prices have surged by 110% in China and 133% in the Mediterranean region since the start of the conflict, continuing to support elevated phosphate fertilizer prices.

Tags: prices