Australian farmers have moved beyond the most acute fertiliser supply concerns that emerged earlier this year, but high prices and uncertain seasonal conditions are likely to continue weighing on fertiliser demand through to 2027, according to Rabobank's latest global fertiliser outlook.
In its newly-released Semi-annual fertiliser outlook report, the specialist agribusiness bank says global fertiliser markets are continuing to feel the effects of disruption to shipping flows through the Strait of Hormuz, while farm profitability pressures and weather uncertainty are constraining demand worldwide.
The bank's RaboResearch division said Australia has moved beyond the most acute fertiliser supply risks that emerged earlier this year - coinciding with the start of the 2026/27 cropping season.
"The Australian fertiliser market has shifted from a period of acute supply concerns towards a more balanced supply situation," Rabobank senior analyst Vitor Pistoia said. "However, affordability remains a significant challenge, with fertiliser prices having risen much faster than key agricultural commodity prices."
Local urea prices reached AUD1,500 per tonne at the height of the Middle East disruption, almost doubling from lows recorded earlier in the year, Mr Pistoia said.
"Despite this, Australia imported 2.92 million tonnes of urea since November 2025, only around 15 per cent below recent averages, indicating supply shortages have been largely avoided," he said.
The report says lower fertiliser demand this season reflects farmers reducing application rates, changing crop rotations and shifting towards less nitrogen-intensive production systems in response to higher costs. In addition, a late seasonal break across northern New South Wales and southern Queensland expanded winter fallow areas and reduced fertiliser requirements.
Mr Pistoia said seasonal conditions will now become a key determinant of demand, particularly for summer crops. "While conditions across much of southern Australia and parts of Western Australia have been favourable, subsoil moisture remains inadequate across many eastern Australian summer-cropping regions. The re-emergence of El Niño adds further uncertainty, given its typical association with below-average rainfall across eastern Australia," he said.
Fertiliser markets
At a global level, RaboResearch says fertiliser affordability remains negative across all major global agricultural regions despite some improvement from the lows experienced earlier in the year.
Phosphate fertilisers are presenting the greatest challenge, with affordability remaining particularly poor due to ongoing supply constraints and elevated production costs.
A near-40 per cent year-on-year decline in global sulphur exports during the first half of 2026 has pushed sulphur prices to record levels, driving up phosphate production costs and keeping phosphate fertiliser prices elevated.
RaboResearch expects global phosphate demand will contract by seven per cent this year, following declining consumption in previous years.
By contrast, nitrogen markets are showing signs of gradual improvement. Mr Pistoia said urea prices have eased from the peaks recorded immediately after Middle East tensions escalated, although market volatility remains high. "We expect global urea demand to decline by around five per cent this year before recovering as affordability slowly improves," he said.
Mr Pistoia said potash remains the most stable of the major nutrients. "While affordability has weakened slightly, global supply has been less affected by geopolitical disruption and RaboResearch expects potash demand to remain relatively stable compared with 2025," he said.
Global outlook
The report suggests Australian farmers should closely monitor developments in global grain and oilseed markets. While geopolitical tensions, shipping disruptions and weather risks continue to create uncertainty, global crop inventories remain historically high, leaving markets better able to absorb supply or demand shocks.
Mr Pistoia expects production and stocks of key global crops - including wheat, corn and rice - to decline slightly in 2026, although supplies remain comfortable by historical standards.
"Combined grain and oilseed stocks are forecast to fall to their lowest level since 2022/23, but the market remains considerably better supplied than during previous periods of extreme price volatility," he said.
According to RaboResearch, the main risks for international agricultural markets over the next six to 12 months include the impact of El Niño on global crop production, rising farm input costs and ongoing export challenges from the Black Sea region. These factors could support commodity prices towards the upper end of recent trading ranges.
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