High profile disruptions in global trade and shipping continued in early 2024, from changing export routes out of Russia and Belarus to events in the Red Sea and low water levels in the Panama Canal, all of which made it harder to ship fertilizers around the world. These issues have been mostly overcome, although risk and insurance costs remain major factors for traders to consider.

A year of potential political change is playing out in 2024, with almost 2 billion people in more than 70 countries due to vote in national elections (based on recent voter turnout). Many topics will be on the table in these elections, several of which will have implications for fertilizers, such as positions on foreign policy, food security, agricultural subsidies and decarbonization.

Fertilizer supply increased across the board in 2023, to varying degrees. Nitrogen production volumes broke away from recent trends to reach record levels in 2023, while phosphate and potash output partially recovered from the challenging events of 2022.

Global ammonia output is estimated to have reached 185.6 Mt in 2023, up by 2% compared to 2022. Urea production is estimated to have increased significantly to reach 195.5 Mt in 2023, up by 6% compared to 2022.

Phosphoric acid production is estimated to have increased by 1% to 85 Mt in 2023 while total MAP+DAP production is estimated to have increased by 3% year-on-year to 64.3 Mt. Despite the partial recovery, global MAP+DAP output did not return to 2020 levels following three years of decline.

Global MOP production is estimated to have risen by 13% to 69.3 Mt in 2023. The Eastern Europe and Central Asia (EECA) region was the largest driver behind this recovery due to higher output from Belarus and Russia. Furthermore, MOP production in Laos grew by 67% in 2023 vs 2022, enough to offset a decline in Chinese domestic production.

Fertilizer consumption forecast

After declining for two consecutive years, global fertilizer use (N + P₂O₅ + K₂O) is forecast to increase by 4% in FY 2023 and by 3% in FY 2024. Consumption is forecast to reach 203.7 Mt nutrients in FY 2024, slightly above the previous record reached in FY 2020. This recovery can be primarily explained by improved affordability on the back of falling fertilizer prices since their peak in May 2022. Fertilizer affordability improved considerably for grains (excluding rice) and oil crops in the second half of 2022 and in the first half of 2023, before stabilizing in the second half of the year. In the first quarter of 2024 the affordability of N and P₂O₅ fertilizers for grain production was poorer than in early 2023, but the affordability of K₂O fertilizers remained better, particularly for oil crops.

The fall and subsequent recovery in global fertilizer use has not been equally shared between the three major nutrients. K₂O use fell by 6.2 Mt (-15%) between FY 2020 and FY 2021, followed by  P₂O₅ by 4.2 Mt (-9%) and N by 2.7 Mt (-2%). The recovery is expected to be driven by N increasing by 5.5 Mt (+5% ), K₂O by 5.4 Mt (+16%), and P₂O₅ by 3.3 Mt (+7%). As a result, by FY 2024, N consumption should be 2% above its FY 2020 level, whereas consumption of P₂O₅ and K₂O is expected to remain 2% lower.

Over the four years separating the two peaks in global fertilizer use, Latin America and East Asia are each expected to add over 2 Mt nutrients to their respective consumption. In contrast, West and Central Europe (WCE) and South Asia are forecast to contract their fertilizer use by 2 Mt and 1.1 Mt respectively. Among smaller consuming regions, Africa is forecast to expand its fertilizer use by 0.5 Mt, but Oceania and EECA are expected to contract by 0.6 Mt and 0.4 Mt, respectively. North America and West Asia are forecast to increase consumption by less than 200 kt nutrients each. K₂O drives the growth in Latin America and the decrease in South Asia, and N accounts for most of the consumption gains in East Asia. In WCE consumption of all three nutrients is expected to decline.

Global fertilizer use is expected to continue expanding in the medium-term, but at a rate decreasing from 2.2% in FY 2025 to 1.5% in FY 2028. This is consistent with expectations of improved nutrient use efficiency and slowing growth in food production, reflecting slowing population growth.

Consumption of P₂O₅ and K₂O is expected to grow faster than N consumption over the medium-term. Between FY 2024 and FY 2028, consumption growth is forecast at 10% for K₂O compared to 8% for P₂O₅ and 6% for N.

Latin America and South Asia are expected to be the main engines of global growth in the medium term, adding between 3 and 4 Mt nutrients each between FY 2024 and FY 2028. East Asia is expected to expand by only 2% over these four years, but this translates into an additional 1.5 Mt nutrients due to its large market size.

About half of the additional quantities of N and P₂O₅ consumed between FY 2024 and FY 2028 are expected to be represented by Latin American and South Asian countries. For K₂O, East Asia and Latin America are forecast to account for almost half of the additional quantities, with South Asia ranking third. Africa ranks third in terms of its overall contribution to additional quantities of fertilizers consumed between FY 2024 and FY 2028 (14%), behind Latin America (24%) and South Asia (23%). This is noteworthy given Africa’s current small market share (4% in FY 2024).

This article features extracts from IFA’s Medium-Term Fertilizer Outlook summary report, published in July 2024 and available in full at www.ifastat.org/market-outlooks.