THERE has been precious little in the way of positive news for fertiliser users over the past two years, with a record rise in prices.
Finally, however, Rabobank is suggesting there may be some light at the end of the tunnel in terms of internationa prices.
Bruno Fonseca, senior farm inputs analyst at Rabobank said fertiliser consumption had fallen through 2022 but said prices may be set for a fall in 2023.
He said as with so many commodity markets, 2022's fertiliser sector had been closely monitoring the Ukraine conflict.
With Russia a major exporter of gas, a key raw ingredient of nitrogen-based fertilisers such as urea, and a critical source of power for energy intensive fertiliser manufacturing facilities there has been upward pressure on markets most of the year due to concern about supply.
Mr Fonseca, however, said, similar to the grain market, where wheat prices are now lower than they were when the conflict began in February, there was some nascent signs of a semblance of normality returning to the fertiliser industry.
"Price movements during these past months have borne a resemblance to those of certain periods in the past," Mr Fonseca said.
"History repeats itself and that becomes more evident when we explore historical trends in the affordability index over time," he said.
For Australia though, the news is not as cheery, with the report finding farmers are likely be again facing historically above-average fertiliser costs in 2023.
Rabobank's Sydney-based farm inputs analyst Vitor Pistoia says Australia's heavy reliance on imported fertilisers - especially urea, potash and monoammonium phosphate - means global turmoil and market volatility will continue to factor heavily into the local fertiliser market.
"Import factors - including still-volatile bulk freight rates, ongoing currency and interest rate challenges and the smaller market size of Australia - though, mean we expect local fertiliser pricing to remain less competitive into 2023 regardless of the underlying global market price movements," Mr Pistoia said.
"In addition to this, domestic freight and logistics constraints are unlikely to be unwound into 2023 meaning Australian farmers will again be facing well-above average costs for crop nutrients in 2023." he said.
However, Mr Pistoia said, local fertiliser demand would be strong regardless of the higher prices, especially in areas which are having a good harvest, such as Western Australia and South Australia.
"With the country on track for a third consecutive year of well-above-average crop production, the majority of farmers may have favourable cash flow as they determine their fertiliser needs for 2023."
"There should also be the need to replenish soil nutrients, given strategies that have been in place to manage high fertiliser costs this past year.
"These factors, on balance, support a reasonably buoyant fertiliser market outlook and a continuation of purchasing for planting needs as harvest advances and farmers are able to make the transition to the 2023 season."
Internationally, Mr Fonseca said the current price trends were in line with a three-year cycle, with the price at present near the peak.
"If history is to be believed - especially trends observed following the 2008 Global Financial Crisis then prices should come down in the coming months," Mr Fonseca said.
He pointed to some critical data to back his forecast.
"The index's moving average is trending lower, as fertiliser prices are returning to pre-war levels.
"For the next three months, the index will continue to trend downward but remain above normal."
He said the key focus within the fert market would be N, due to the energy crisis in Europe, which was not easing in the same way grain markets were.
"The natural gas crisis in Europe has the potential to make urea and ammonia more expensive and, therefore, to keep the index at a high level."
He said nitrogen's natural connections with the oil and gas markets, which are notoriously volatile, meant it was subject to higher levels of price variation than other fertiliser products such as phosphorus.
The 2022 volatility of urea prices up to mid-October was above 60pc, three times more than the five-year average.
"As long as the natural gas crisis in Europe lasts, volatility in the nitrogen-based fertilizer market will persist, with weeks of stronger demand pushing prices higher and weaker weeks pushing prices lower," Mr Fonseca said.
On the P front he said phosphate fertiliser prices were trending lower as the market attempts to attract demand destroyed by the high prices.
However, Mr Fonseca cautioned against growers getting too excited about the prospect of a significant drop in P values.
"High production costs should prevent big decreases inprices and logistics remains a risk."
The potash market is also stabilising after a big run-up in values, due to the fact two of the world's larger suppliers in Russia and Belarus were embroiled in the Ukraine conflict.
In a similar story to phosphorus, K prices have dropped in a bid to win back lost demand.