Global fertilizer sector faces significant downturn next year amid price surge
The RaboResearch outlook is on the heels of China suspending exports of some of the key fertilizers, including speciality fertilizers such as Technical Monoammonium Phosphate (TAMP) and urea-solution products such as AdBlue, besides conventional fertilizers like di-ammonium phosphate (DAP) and urea from October 15.
| Photo Credit:
VENGADESH R
Fertilizer demand across the world is set to decline sharply next year (2026) as rising prices severely strain affordability, says a new report by RaboResearch.
According to the “Semi-annual Fertilizer Outlook 2H 2025”, the Fertilizer Affordability Index (FAI) has fallen to its lowest level in more than a decade, setting the stage for a deeper contraction in 2026 — though some regions still show signs of resilience.
The RaboResearch outlook is on the heels of China suspending exports of some of the key fertilizers, including speciality fertilizers such as Technical Monoammonium Phosphate (TAMP) and urea-solution products such as AdBlue, besides conventional fertilizers like di-ammonium phosphate (DAP) and urea from October 15. The trader fears the Chinese move could lead to supply shortage and a 10-15 per cent increase in fertilzer prices.
Between April and September 2025, global fertilizer prices increased by about 15 per cent, with phosphates climbing nearly 19 per cent. As a result, the phosphate component of the FAI dropped to –0.74 in September, matching the lowest level recorded in the past 15 years.
“The nitrogen index also fell and is expected to decline further in 2026, affecting demand in the Northern Hemisphere,” said Bruno Fonseca, Senior Analyst – Farm Inputs at RaboResearch, the research arm of the Netherlands-based Rabobank.
Downward trend
“Overall, the FAI should continue its downward trend, with the 12-month moving average approaching the negative phase seen in 2022.”
Compounding the pressure from high input costs is a backdrop of depressed agricultural commodity prices. The report highlights that the world’s production machine is “hitting on all cylinders”, with global corn, wheat, and soyabean production reaching record levels in 2025.
“While there is a case to be made for prices to be well-supported from current levels, record production in major production areas like Brazil and the US is overwhelming the market with supply,” Fonseca said.
Challenging profitability
“This will keep prices depressed in the short-to-medium term. Challenging profitability in the grain and oilseed sector portends poor fertilizer affordability and potential decline in fertilizer use in the coming year.”
The report also highlights a major policy shift in Europe. From 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) will impose a carbon tax on about 15 million tonnes of nitrogen-based fertilizer imports annually.
High-emission products such as ammonia and urea will face higher costs, prompting importers to seek lower-emission suppliers. Many are also exploring hedging strategies, including early CBAM certificate purchases and EUA futures, to manage carbon price volatility.
RaboResearch expects the FAI to remain under pressure through 2026, signalling another challenging year for the global farm inputs sector — despite isolated pockets of resilience.
Published on October 29, 2025
