Fertilizer market faces price increases amid growing demand in 2025

Bruno Fonseca, Senior Analyst  at Rabobank Inputs

The Brazilian agricultural fertilizer market is experiencing a cautious scenario amid a trend of rising international prices for key nutrients, according to an analysis by RaboResearch, the market analysis sector of Rabobank.

According to this report, signed by Bruno Fonseca, Senior Analyst at Rabobank Inputs, the global supply and demand balance was tight. The primary pressure factor stems from the price of phosphorus, which is approaching its second-highest historical value, only behind the levels observed during the 2022-2023 period, marked by the onset of the war in Ukraine.

In the Brazilian state of Mato Grosso—one of the country's largest agricultural producers—the average price of MAP (monoammonium phosphate) reached approximately BRL4,750 (equivalent to US$832 at the current exchange rate) per ton by the end of March, representing an increase of about 20% compared to the 2024-2025 season prices.

Despite the rising costs, projections indicate growth in fertilizer deliveries to Brazilian farmers, the end consumers. RaboResearch estimated a 2% increase compared to the final numbers for 2024, with expectations of reaching around 46.6 million tons in 2025.

"These numbers confirm that the demand for agricultural inputs exists and should continue, especially considering the prospects for the grain market," highlighted the Rabobank market analysis report.

According to analysts from a financial institution specializing in agribusiness, the second quarter of 2025 is expected to see an acceleration in fertilizer purchases for the upcoming soybean season, with particular attention to the pace of phosphorus acquisition.

Farmers Situation

The depreciation of the Brazilian currency, the Real (BRL), observed throughout the fourth quarter of 2024, brought some relief to rural producers. The estimated average exchange rate for grain sales reached approximately BRL5.82 per dollar, about 11% higher than the estimate as of August 2024.

This exchange rate variation contributed to improving the operational margins of the 2024-2025 season, which are slightly better than initially anticipated. However, RaboResearch warned that grain producers still face a delicate situation due to tighter margins, a scenario expected to persist for approximately three seasons starting in 2024.

During this period, farmers will need to work on reducing leverage resulting from investments made during the boom cycle that extended until 2023.

International Scenario

The report emphasized the importance of monitoring international events, particularly in light of the current global geopolitical climate, with a special focus on U.S. import tariffs that could impact the agricultural input market.

Rabobank's analysis sector advised both producers and agrochemical companies to adopt a "cautious" stance, as the economic moment is still considered sensitive, despite the positive prospects for the Brazilian grain market.

(Editing by Leonardo Gottems, reporter for AgroPages)