uploads/2018/02/Fertilizer-Affordability-2018-02-19-1.jpg

How the Fertilizer Affordability Index Trended Last Week

By

Updated

Fertilizer affordability

In the earlier parts of this series, we saw that the prices for NPK (nitrogen, phosphorous, and potassium) fertilizers were broadly flat to positive last week. Let’s look at how this affected the fertilizer affordability last week. The Fertilizer Affordability Index, which is issued by the Mosaic Company (MOS), measures the change in key NPK fertilizers and key fertilizer consuming crops such as corn, wheat, and soybean.

Article continues below advertisement

Weekly performance

Last week, the Fertilizer Affordability Index was unchanged week-over-week at 0.7x. This index was set to one in the base year of 2005. A level below one means that fertilizers were relatively affordable compared to the base year. Consequently, a level above one would mean the opposite.

Recently, the Fertilizer Affordability Index has risen and is inching towards the base year’s level of one. To put this in perspective, the average level of the index in 2017 was 0.65x. However, since 2010, this index has averaged 0.71x.

Higher fertilizer affordability is highly positive for fertilizer purchases, as it drives up demand for companies (XLB) such as Nutrien (NTR), Mosaic (MOS), CF Industries (CF), and Terra Nitrogen (TNH).

For more updates, visit our agricultural fertilizer page.

Advertisement

More From Market Realist