Plentiful global fertiliser supplies along with a stable currency outlook are giving Australian farmers confidence affordable fertiliser prices will continue in the year ahead.
Agribusiness specialist Rabobank has released its latest semi-annual Global Fertiliser Outlook which notes that while global fertiliser prices have stepped back from 10-year lows during the second half of 2020, this newly-found price strength was expected to tail off during the second half of this year.
"Heavy supplies and growing production capacity will continue to weigh on prices across the nutrient complex," the report says.
The bank expects global urea and phosphate prices to remain stable until the start of quarter two, supported by northern hemisphere demand.
However, once that seasonal demand had subsided, global markets would again be exposed to heavy supplies, the report says.
And for Australia - where 70 per cent of fertilisers overall are imported - that means favourable farmgate prices for fertiliser should be "here to stay for 2021", Rabobank agricultural analyst Wes Lefroy said.
"For the three main fertiliser products sold domestically, the figures are even higher when it comes to Australia's reliance on imported product," he said.
"During the financial year 2019, 92pc of urea, 81pc of mono-ammonium phosphate (MAP) and 100pc of Muriate of Potash (MOP) sold here was imported."
And of Australia's domestically-produced fertiliser products, Mr Lefroy said, a number rely on imported raw materials.
"As such, local farmgate fertiliser prices are largely driven by global prices, the Australian dollar and, to a lesser extent, ocean freight rates," he said.
"For growers, the good news is we expect heavy supplies and growing production capacity will continue to weigh on prices across the global fertiliser market."
Australian demand Australia's recent bumper winter crop - production is forecast by ABARES to increase 76pc year on year - had fuelled local fertiliser demand, the Rabobank Global Fertiliser Outlook said.
Nationally, according to Fertiliser Australia, nitrogen sales were up 26pc year on year during the first half of 2020 and, despite COVID-19's supply chain pressure, urea imports passed two million metric tonnes in August last year - well above the preceding three years.
Potassium sales were also up 41pc year on year.
With a continuing wet summer forecast, Mr Lefroy said strong demand was likely to remain into 2021 as Australian farmers replenish nutrients following the bin-breaking winter crop.
"A long application lead time and high availability will ensure importers can supply demand for next season and decrease the likelihood of any localised shortages," he said.
Mr Lefroy said while global fertiliser prices overall were expected to remain favourable for Australian producers, one factor limiting importers' purchasing power would be a relatively weak Australian dollar - which the bank expects will continue to trade near the USc 76 for the next 12 months.
At current urea prices, a one cent drop in the AUD represents approximately a five to six AUD/tonne increase in local prices, he said.
The ongoing impacts of COVID-19 also needed to be considered in the year ahead.
"The resilience of local and global fertiliser supply chains to the impacts of the global pandemic this year has been something to celebrate. In fact, to the end of August 2020, year-to-date urea imports reached 2.1 million metric tonnes, some 300,000 tonnes more than 2019, and 665,000 tonnes more than 2018," Mr Lefroy said.
"However, with case numbers still very high in many parts of the world, the potential for a COVID-19-related interruption to either supply or production remains."