Market and product

In response to the economic slowdown in many emerging and developing countries, persistent low international prices for most agricultural commodities, and dry conditions across South Asia, Southeast Asia, Latin America and Africa, world fertilizer demand is expected to contract by 1.0% in 2015/16, to 181 million tonnes (Mt) nutrients. Drops are seen of similar magnitude for the three nutrients: -1.0% for N, to 108 Mt; -1.0% for P, to 41 Mt; and -0.8% for K, to 32 Mt. Aggregate demand in 2015/16 is anticipated to rebound in the three regions where it contracted in 2014/15: Eastern Europe & Central Asia (EECA), West Asia and North America. Demand is seen as dropping elsewhere. The sharpest decline is expected in Latin America, reflecting unfavorable economic, political and weather conditions in Brazil and Argentina. African demand was hit by widespread El Niño impacts and cuts to fertilizer subsidy budgets in several countries. The poor monsoon in South Asia strongly impacted the 2015/16 winter season. More modest drops are anticipated elsewhere.

The outlook for 2016/17 is more optimistic in view of slightly improving market conditions, the expected more favorable weather, and a better political and economic situation in some sizable markets. Global fertilizer demand in 2016/17 is seen as rebounding (+2.9%) to 186 Mt, with growth rates of relatively similar magnitude for all three nutrients: +3.0% for N, to 111 Mt; +3.0% for P, to 42 Mt; and +2.3% for K, to 33 Mt. Fertilizer demand would remain almost unchanged in North America and would increase elsewhere. Demand growth in EECA is seen as firm, as grain exports are expected to benefit from the current weakness of regional currencies. Thanks to prospects for normal monsoon rains, demand in South Asia would fully recover from the downturn in 2015/16. Driven by recent political change in Argentina, demand would firmly rebound in Latin America but would not fully recover owing to persistent recession in Brazil. Expected increases in the rest of the world would be smaller.

Global fertilizer demand forecast to remain slightly below 200 Mt by 2020/21

Medium-term agricultural projections point to slightly tightening market conditions, assuming average weather patterns.

In the absence of major economic or policy changes in the main fertilizer-consuming markets, the current context supports moderate fertilizer demand growth prospects in the years to come. According to the baseline scenario, world demand would rise on average by 1.6% per annum (p.a.) between the base year (average of 2013/14 to 2015/16) and 2020/21. Aggregate global demand is projected to reach 199 Mt at the end of the outlook period. K demand would expand firmly (2.3% p.a. to 37 Mt); P demand would grow more moderately (1.7% p.a. to 45 Mt); and N demand growth would continue to progressively decline (1.2% p.a. to 117 Mt). This rebalancing of the N:P:K ratio reflects progressive adoption of better fertilizer management practices by farmers.

The highest growth rate would be in Africa (3.6% p.a.). Demand would also expand firmly in Latin America (2.9% p.a.), South Asia (2.9% p.a.) and EECA (2.8% p.a.). Latin America would benefit from the competitive advantage of Brazil and Argentina on the global soybean, maize and sugar markets. Similarly, EECA has the potential to increase its share of global cereal trade. South Asian demand is strongly influenced by fertilizer subsidy regimes, whose evolution is highly unpredictable; high uncertainty is therefore associated with forecasts for this region. In East Asia, fertilizer demand growth is forecast to slow further (0.9% p.a.), as Chinese N and P demand is likely to reach a plateau by the end of the outlook period. Demand in developed countries is anticipated to rise marginally, with stronger prospects in Oceania. With N and P demand in China levelling off, about half the world market can be considered ‘mature’. In volume terms, South Asia, East Asia and Latin America would account for 33%, 22% and 22%, respectively, of the global increase in total fertilizer demand anticipated in the next five years.