Fertilizer Affordability Index Moved Sideways Last Week
Fertilizer affordability for fertilizers like potash, phosphorous, and nitrogen has remained fairly high in recent years. In the recent earnings call, high fertilizer affordability appeared to drive the positive momentum in potash fertilizer segments for companies (MOO) like PotashCorp (POT), Mosaic (MOS), Intrepid Potash (IPI), and Agrium (AGU). In the past four weeks, the fertilizer affordability has dampened.
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Fertilizer Affordability Index
For the week ending September 1, the Fertilizer Affordability Index moved sideways week-over-week to 0.64x. The index is issued by Mosaic. It was indexed to one in 2005. Any level below one means that fertilizers were more affordable compared to the base year—2005. Any level above one means that the fertilizers were less affordable compared to the base year.
Fertilizer affordability remains high, which is positive for farmers. However, it has impacted fertilizer producers’ margins. High affordability was primarily a result of falling fertilizer prices on the back of excess capacity buildup. The outlook for nitrogen and phosphate fertilizer prices remains weak, while the outlook for potash fertilizers seems better.
We’ll continue tracking fertilizer prices. Be sure to keep checking Market Realist’s Agricultural Fertilizers page.