A World Bank analysis published predicted that fertiliser costs, which have increased by about 30% since the year’s beginning and by an additional 80% in the past year, will continue to grow for a while.
According to the World Bank Commodity Market (May) report, reasons that will keep fertiliser prices high include rising input costs, supply chain disruptions brought on by sanctions in Belarus and Russia, and China’s export limitations, the timing of which is uncertain.
To maintain domestic supplies, China has halted fertiliser exports at least through July 2022.
Widespread production reductions in ammonia, a crucial component of nitrogen-based fertiliser, are being caused by this as well as rising natural gas prices, particularly in Europe.
Similar to this, China’s fertiliser manufacturers were compelled to reduce production due to skyrocketing coal prices, which also increased urea prices. Coal is used as the primary feedstock for ammonia synthesis in the country. The cost of phosphate fertiliser has increased along with the cost of ammonia and sulphur.
According to the report, urea prices have risen above their 2008 peak, while phosphate and potash prices are edging closer to their 2008 highs, raising ongoing concerns about the supply and affordability of fertiliser, which have been exacerbated by the situation in Ukraine.
Fertiliser is now at its least affordable level since the 2008 global food crisis despite higher crop prices, which may limit fertiliser use.