Incitec Pivot is warning farmers should plan for average global fertiliser prices to stay at least $100 per tonne higher in the next 8 years than the past decade. The company commissioned independent market research in preparation for the company to split its fertiliser and explosives businesses into two listed companies. The research forecasts nominal FOB pricing for diammonium phosphate (DAP) will average $750/t out of Saudi Arabia and China in the six years to 2030, above the 2010-2020 average values of $445/t – $600/t. Prices for Urea based on US Gulf of Mexico values are an average $625/t, around $130/t higher than the past decade. Ammonia prices from the US are forecast to be more extreme, around $1,000/t, up from a historical average of $645/t.
Despite added costs and supply constraints of Russia’s invasion of Ukraine and related European gas restrictions, long term prices and demand will be underpinned by compelling megatrends according to Incitec Pivot. As arable land per person has declined 35% since the 1980s, feeding the world required a substantial lift in the productivity of farming systems. This along with a growing world population and increasing real incomes is expected to significantly lift food and protein demand from regions where undeveloped economies vomited and food consumption expectations are low.