Semiannual fertilizer outlook: Poor affordability to pressure global fertilizer demand in 2026

Global fertilizer markets are entering a new phase of contraction, as rising prices begin to weigh on demand. This shift, first signaled in our April outlook, is now clearly reflected in the continued decline of the fertilizer affordability index. While some regions still show signs of resilience, the broader trend points to weakening demand in 2025 and a more pronounced downturn in 2026.

The 12-month moving average of the affordability index has moved deeper into negative territory, confirming the start of a new downcycle. This phase closely resembles the previous contraction, suggesting that the market is entering a prolonged period of reduced consumption.

Regionally, market dynamics remain volatile. In the US, geopolitical tensions and trade tariffs are expected to disrupt the upcoming season. European prices are likely to rise with the implementation of the Carbon Border Adjustment Mechanism (CBAM). 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.