Urea market expected to remain volatile

Global urea supplies are fragile, with several key suppliers exporting lower volumes year-on-year, which creates a ripple effect foravailable volumes for domestic fertiliser importers, Rabobank says.

The agribusiness banking specialist says urea is by far the most widely traded fertiliser in the world and, for New Zealand, represents nearly 30 per cent of total fertiliser imports in 2024.

In a recent report, the RaboResearch division says due to minimal volumes of urea produced domestically, New Zealand is particularly sensitive to global events.

RaboResearch farm-inputs and commodities analyst Paul Joules says the urea market is expected to remain volatile due to complex supply chains and geopolitical influences, with prices elevated compared to historical averages.

“Ongoing supply issues in key exporting regions and the sensitive nature of natural gas markets – the predominant feedstock for urea production – suggest that urea prices will likely stay high.

“At present, prices are trading around the five-year average. However, if we were to compare current prices with the pre-Russia-Ukraine war five-year average price, they are 45 per cent higher.”

Joules says as well as geopolitical issues impacting fertiliser prices and availability, natural gas is the other key influence within the market.

“The sensitivity of natural gas markets – to both weather and geopolitical events – adds to the volatility of urea prices,” he says.