Global fertiliser stocks appear to be rebuilding and will potentially push prices down during the next five months, but farm fuel prices could be rising again.
Although the fertiliser price dip would probably prove too late to significantly benefit supplies on offer to Australian farmers going into the current winter cropping season, Rabobank is upbeat about the overall outlook.
Urea and phosphate values were now down to about half their market peaks of two years ago, although had been lower last spring until kicking up over summer to return to levels similar to April 2023.
Grains and oilseeds analyst, Vitor Pistoia, said global price for phosphate fertiliser had hovered around $US600 a tonne for diammonium phosphate since November after China suspended exports, but about 7 million tonnes now appeared likely to be released to the market.
"The outlook for the next five months suggests a potential drop of as much as 15 per cent," he said.
Chinese nitrogen fertiliser production was also operating at much higher volumes than a year ago, suggesting surplus stocks were accumulating and may also exert bearish pressure on the market the next four months.
However, there was a lack of official guidance from Beijing about likely export quotas, which would keep traders guessing until later in May.
Meanwhile, India appeared to have ample urea stocks on hand which had subsequently meant global prices slipped about 8pc below March market expectations.
"These developments bode well for those planning to purchase inputs in the next four months, whether they require phosphorus or nitrogen," Mr Pistoia said.
However, Rabobank's latest agribusiness monthly report noted while natural gas prices were forecast to remain neutral or even ease because European stocks were above their five year average, Ukraine remained a significant risk factor for gas supplies, and in turn, nitrogen fertiliser prices.
Gas storages in western Ukraine had been under attack from invading Russian forces which could mean supplies may shut down if the pressure on energy facilities increased.
Europe could therefore face insufficient stocks by late 2024, which highlighted the difficulty in maintaining stable stocks and global prices in the midst of geopolitical conflicts and the fragile economic times.
Global fuel prices and freight rates had also been impacted by war in Europe and the Middle East, with Brent crude oil climbing 4.6pc in March for the third consecutive month, although Australian diesel prices at the terminal moderated slightly.
Rabobank's senior strategist, Ben Picton, said average April diesel prices were likely to lift again, partly because improving economic growth in the US and China was adding to demand, while Russian refining capacity might be restricted by recent Ukrainian air strikes.
Meanwhile, conflict in the Middle East was expected to see international freight movements continue to be re-routed away from the Suez Canal shipping route for the second half of this year.
Mr Picton expected 2024 freight costs to remain volatile because of global military events and multiple other factors ranging from uncertainty about the US election to port labour-related disruptions.