Fertilizer affordability is an important indicator when it comes to fertilizer demand. The Fertilizer Affordability Index is issued by Mosaic and gives insight into the level of fertilizer affordability with respect to crop prices. For companies (XLB) such as Nutrien (NTR), CF Industries (CF), Mosaic (MOS), and Intrepid Potash (IPI), the higher the affordability, the better.
The Fertilizer Affordability Index for the week ending October 26 rose slightly to 0.86x from 0.85x a week ago. Since crop prices are key in determining fertilizer affordability, we must also look at how they moved last week. The crop prices index declined 2.9% week-over-week, while the fertilizer price index declined by 1.4% over the same period. With the faster decline in crop prices compared to fertilizer prices, the affordability index was negatively affected.
With the earnings season upon us, we’ll get more details on how the fertilizer and crop price environment has progressed over the last quarter and what 2019 might hold for these variables. The supply-demand environment will likely also play a key role in how fertilizer affordability is impacted.
For ongoing updates on this sector, visit Market Realist’s Fertilizer page.