uploads///Fertilizer Affordability

Fertilizer Affordability Improved for the Week Ending April 21

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Aug. 18 2020, Updated 4:39 a.m. ET

Fertilizer affordability

The Fertilizer Affordability Index remained lower for the week ending April 21. Fertilizers were more affordable than the base year, as we’ll discuss below.

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Affordability

The Fertilizer Affordability Index, compiled by Mosaic (MOS), is calculated by comparing the Fertilizer Price Index (key fertilizers indexed to 2005) with the Crop Price Index (key fertilizer consuming crops indexed to 2005). For the week ending April 21, the Fertilizer Affordability Index remained flat at 0.59x—compared to the previous week. The Fertilizer Affordability Index was scaled to one in 2005—the base year. Any point lower than one means that fertilizers are more affordable compared to the base year.

Year-over-year, the Fertilizer Affordability Index was lower from 0.6x. A ratio below 1.0x means that fertilizers are more affordable than during the base year. Fertilizer companies such as Intrepid Potash (IPI), Israel Chemicals (ICL), and CF Industrial Holdings (CF) lowered their cost of production and offered deep discounts to farmers (MOO).

With fertilizer and crop prices trading at multiyear lows, it will be interesting to see how the ratio changes in the near term. Earnings season is approaching. To learn more, read Here Comes Agribusiness: Your Pre-Earnings Update.

For ongoing details and updates on the industry, visit Market Realist’s Agricultural Fertilizers page.

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