With agricultural commodity prices having largely remained stable since the start of 2025, this decline in affordability is primarily due to an increase in global fertiliser prices, the report says.
Between April and the end of September 2025, fertiliser prices increased by about 15 per cent, RaboResearch said. Phosphates saw an increase of almost 19 per cent.
While some regions of the world continue to show resilience when it comes to fertiliser demand, the broader trend points to weakening demand 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 confirmed the start of a new downcycle in the global fertiliser market.
“This phase closely resembles the previous contraction, suggesting the market is entering a prolonged period of reduced consumption,” he said.
He said Australian farmers continued 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 were looking less affordable.
Globe awash with grain supply
The report said commodity prices for grains and oilseeds remained under downward pressure, as the world’s “production machine” was 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,” Paul said.
“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
Paul said with Australian farmers heavily reliant on imported fertiliser, foreign exchange played a major role in the country’s retail fertiliser prices.
“Over the past 12 months, the AUD/USD cross has declined 3.9 per cent and this has been a clear headwind for Australian fertiliser importers,” he said.
Positively, RaboResearch was forecasting a modest increase in the Australian/US dollar exchange rate over the next 12 months, potentially reaching USD$0.68, he said.
“This could provide some relief for fertiliser import prices here, although a tight global supply and demand situation may limit the downside,” Paul said.
The report said while demand for urea in Australia had been low in recent months, as the nation moved into the winter crop harvest period, applications were relatively strong earlier in the season.
“NSW, Queensland and Western Australia likely went a little heavier on urea applications, given above-average rainfall levels in parts of these states,” Paul 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.”
Regional dynamics
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, which will see a carbon tax imposed on about 15 million metric tons of nitrogen-containing fertiliser imports a year.
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,” Paul said.
Global outlook
Urea consumption is forecast to decline in 2026, 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.
