Rising prices for fertilizer are starting to effect demand for the products. Rabobank analysts first noted this shift in a Global Fertilizer Market Outlook in April of 2025. Now, the global fertilizer market is clearly showing a downward trend for demand in 2025 that will continue in 2026.
Between April 2025 and the end of September 2025, fertilizer prices increased by approximately 15% while prices for most commodities have remained largely stable since the start of the year.
The Global Fertilizer Market Affordability Index, as tracked by Rabobank, has moved more deeply into negative territory. Based on the resemblance to a previous global fertilizer market contraction, the data suggest that the global fertilizer market is entering a prolonged period of reduced consumption.
Europe Prepares for its Carbon Border Adjustment Mechanism
The EU’s Carbon Border Adjustment Mechanism (CBAM) will impose a carbon tax on approximately 15 million metric tons of nitrogen-containing fertilizer imports annually. This marks a pivotal shift in the EU’s climate policy, integrating carbon costs into imported goods and reshaping fertilizer sourcing and pricing dynamics. The CBAM will have a significant price impact on high-emission nitrogen fertilizers, particularly ammonia and urea, which dominate EU import volumes and carry the highest embedded emissions. Importers are expected to adopt strategic cost management approaches, including sourcing from suppliers with verified emissions data and decarbonization plans. Hedging strategies, such as early CBAM certificate purchases and the use of EUA futures, can mitigate carbon price volatility and support liquidity planning.
Regional Markets Remain Volatile
In the US, geopolitical tensions and trade tariffs are expected to disrupt the upcoming season. In Brazil, farmers face tight margins and limited access to credit, although fertilizer deliveries could reach record levels in 2025. China is prioritizing domestic supply, while India continues to play a central role in global urea trade, influencing prices with each new tender.
Urea consumption is forecast to decline in 2026, following a sharp price increase that has already triggered demand contraction – particularly in Brazil, where farmers are shifting to ammonium sulphate. Phosphate prices remain high, leading to an expected 4% drop in global consumption in 2025, with further declines anticipated in 2026. Chinese exports have fallen, while shipments from Morocco and Saudi Arabia have increased. However, overall trade volumes remain subdued.
Potash demand, which rebounded in 2024 due to lower prices, is likely to slow again in 2025 as prices rise. Brazil’s plans for record imports may partially offset declines elsewhere, but if elevated prices persist, global demand is expected to fall in 2026.
Read more about Global Fertilizer Markets in Rabobank’s Semiannual Fertilizer Outlook.