Fertilizer affordability tracks how the prices of key NPK (nitrogen, phosphorous, and potassium) fertilizers moved in comparison with the key fertilizer-consuming crops such as corn, soybean, and wheat.
The Mosaic Company (MOS) issues the Fertilizer Affordability Index, which fell last week to 0.66x from 0.67x a week ago. The index is indexed to one in the base year of 2005, so a point below one means that fertilizers are more affordable and a point above one means that fertilizers are less affordable.
In the above chart, we see that the fertilizer affordability index dipped below 0.5x between April 2016 and May 2016, but rebounded from that level to reach a peak of slightly above 0.65x. While the index did tumble after that point, it did not test the previous resistance under 0.50x.
Following the recent low, the increase in the fertilizer index was partly driven by an increase in fertilizer prices in 2017 when the supply side rationed the production capacity to let the market prices moderate.
To know how fertilizer prices impact producers, read Agricultural Fertilizer Industry: Your Comprehensive Overview.