StoneX Market Insights: urea prices decline amid lower demand

Australian grain growers might encounter favorable opportunities for fertilizer purchases in the coming months, as urea prices are showing a downward trend due to reduced global demand, says StoneX research. Josh Linville, Director of Fertilizer at StoneX, headquartered in Missouri, USA, highlighted that the nitrogen fertilizer market is witnessing a drop, particularly benefiting Australian grain producers. “The urea market has become significantly quieter, impacting global values,” Linville noted. He pointed out that after India’s last urea tender, approximately 2 million tonnes of urea remained unsold, signaling a surplus in the market.

This excess, coupled with ongoing increases in global production, has led to growing inventories and rising carrying costs. Despite the decline in urea prices, Linville observed that global buyers are hesitant to make purchases, hoping for further reductions, thereby adding more downward pressure on prices. Urea values have notably decreased since the supply chain-induced price hikes in 2022, with New Orleans urea prices recently recorded at $US313 per ton, a rate among the lowest quartile.

Linville advised that growers should determine what they consider a fair price, as the current downtrend might not persist indefinitely. He anticipates that the market could offer buying opportunities in the next 30 to 60 days, a period when Australian farmers typically do not focus on their fertilizer budget. This timing could be advantageous for planning next year’s fertilization cycle.

On the phosphate front, the significant development involves China, the world’s largest producer and exporter of phosphate-based fertilizers, imposing export duties on phosphate. The duration of this restriction is uncertain, and its extension into Australia’s traditional fertilizer import season in autumn could have substantial implications. While sourcing alternative products is feasible, they would likely incur higher freight costs due to increased distances.

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Linville also mentioned concerns about how these restrictions might affect the market, suggesting that they could paradoxically support global prices or lead to rapid market changes if lifted. To assist Australian grain growers in making informed decisions, StoneX has introduced a fertilizer newsletter. This publication aims to provide comprehensive global information, helping growers understand market dynamics, such as the impact of the Chinese government’s actions and other international events on the fertilizer market.