uploads///Fertilizer Affordability

Are Fertilizers Becoming Less Affordable?

By

Nov. 20 2020, Updated 10:39 a.m. ET

Fertilizer affordability

Fertilizer affordability affects sales volume for fertilizer companies (NANR) such as Mosaic (MOS), Nutrien (NTR), CF Industries (CF), and Intrepid Potash (IPI). Lower affordability negatively impacts demand, and fertilizer affordability has been deteriorating over the past few weeks.

Article continues below advertisement

Affordability index

Last week, the Fertilizer Affordability Index, which is issued by the Mosaic Company, rose to 0.92x from 0.87x a week ago. This index level of close to one can be interpreted as fertilizer affordability becoming weaker compared to the levels observed since January 2016.

As we discuss the affordability index, it’s important to also dig into what negatively impacted fertilizer affordability. Essentially, this affordability index is a ratio of fertilizer prices over crop prices. Week-over-week, fertilizer prices (numerator) have risen slightly, but the crop prices (denominator) have fallen faster. The crop price index fell ~3.7%, which was the primary reason for the spike in the index.

In other words, lower crop prices make fertilizer less affordable, and this may cause a slowdown in fertilizer purchases until crop prices start picking up.

For more updates, visit Market Realist’s sector page.

Advertisement

More From Market Realist

  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.