The Fertilizer Affordability Index moved slightly lower to 0.84x in the week ending October 19 from 0.85x in the week ending October 12. The index is issued by Mosaic (MOS). The index shows the price movement for NPK (nitrogen, phosphorous, and potassium) fertilizers in relation to the price movements in key fertilizer-consuming crops.
Digging deeper into the fertilizer affordability movement last week, the downward movement in the index level was mainly driven by higher crop price index movement, while the Fertilizer Price Index remained almost flat. When crop prices rise, fertilizers become relatively more affordable. Farmers try to increase crop production by using fertilizers in order to sell crops at higher prices.
Last week, the Fertilizer Affordability Index was much higher than 0.68x in the same week in 2017 and 0.71x since 2010. The rise indicates that fertilizer affordability in the current week is relatively lower than last year and since 2010. While higher fertilizer affordability is critical for companies (MOO) like Mosaic, Nutrien (NTR), CF Industries (CF), and Israel Chemicals (ICL), it wouldn’t hurt if these companies realize higher prices at the cost of lower volume.
For ongoing updates, visit Market Realist’s Fertilizers Research page.