Fertiliser prices

Fertiliser is used primarily in agricultural application; thus, downstream farming constitutes a lead source of fertiliser demand. Fertilisers contain minerals such as nitrogen, potassium and phosphorus. These can be either straight or compound. Compound fertilisers contain at least two of the three essential nutrients, whereas straight products contain only one of these nutrients.

Natural gas is a key input in the energy intensive production of nitrogenous fertiliser, the most commonly used type of fertiliser. It is used in the synthesis of ammonia which forms the basis of all nitrogen fertilisers. Strong global demand high gas costs and higher grain prices have supported price increases. The weakness of the pound also inflated prices because a significant number of compounds are imported. Prices continues to rise as the cost of fossil fuels rose over much of the latter half of the period.

The effect of the COVID-19 outbreak caused the price of fossil fuels to plummet significantly from March 2020. With the reduction in energy usage further driving natural gas and therefore fertiliser prices down. The net effect of all this volatility led to a decline in fertiliser prices in 2020-21. Lockdown measures have been eased in 2021-22 and agricultural production has resumed at full capacity, however energy prices surged as natural gas supply plummeted. As a result, fertiliser prices skyrocketed in late 2021. Price rises were compounded following the Russian invasion of Ukraine which resulted in further declines in European gas supplies and fears over gas shortages. In total fertiliser prices rose on average 76.9% in 2021-22 followed by a 61.6% rise in 2022-23. Over the five years through 2025-26, fertiliser prices are expected to grow at a compound annual rate 4.8%, despite a 6.2% dip in 2025-26.