FAO Expects Fertilizer Prices to Stay Elevated Through 2026 Despite Likely Easing in Nitrogen Markets

Global fertilizer markets are expected to remain under pressure through the second half of 2026, with prices likely to stay well above historical averages despite signs of easing in nitrogen fertilizers, according to the Food and Agriculture Organisation's (FAO) latest Food Outlook report.

In its Fertilizer Market Update, the FAO said fertilizer markets continue to face significant disruptions stemming from geopolitical tensions, higher energy prices and shipping bottlenecks, particularly around the Strait of Hormuz. While the organisation expects some improvement in supply conditions from June onwards, it cautioned that recovery across nitrogen, phosphate and sulphur-linked fertilizer markets is likely to be slow and uneven.

The report said the baseline outlook assumes a gradual reopening of shipping routes through the Strait of Hormuz, easing pressure on European natural gas markets and the eventual relaxation of fertilizer export restrictions imposed by key producing countries. Even under this scenario, fertilizer prices are expected to remain historically elevated, although below the peaks recorded earlier this year.

FAO noted that uncertainty remains exceptionally high. The pace of any ceasefire in the Near East, renewed disruptions to fertilizer infrastructure, weather-related fluctuations in fertilizer demand and changes in global crop prices could all influence fertilizer affordability and international trade during the remainder of 2026. Overall fertilizer trade will depend not only on price movements but also on supply accessibility amid continuing geopolitical tensions and seasonal demand.

Among fertilizer segments, nitrogen fertilizers are expected to see the earliest price correction. FAO forecasts international urea prices to ease from June as fertilizer shipments resume from the Persian Gulf and China returns to export markets after issuing new export quotas. Seasonal demand from Brazil and India, together with pre-season purchases in Europe, is expected to support active nitrogen trade. Nitrate fertilizer prices are also projected to soften during the European summer.

However, FAO warned that nitrogen markets remain highly vulnerable. Any renewed attacks or disruptions affecting fertilizer production and logistics in the Russian Federation could trigger fresh export restrictions and reverse the expected decline in prices.

The outlook for phosphate fertilizers remains considerably tighter. According to FAO, international phosphate prices are expected to remain firm and could rise further because of exceptionally limited supplies of both finished fertilizers and essential raw materials. Continued restrictions on Chinese exports of DAP and MAP fertilizers, combined with logistical disruptions affecting Gulf suppliers, are expected to constrain global availability.

India is expected to remain a key driver of phosphate demand. Although DAP inventories have improved compared with last year, domestic production remains constrained and import availability uncertain. In Brazil, sharply higher MAP prices, tightening agricultural credit and weaker affordability are already discouraging purchases, limiting demand growth despite seasonal requirements.

Potash markets are projected to remain relatively more stable. FAO expects muriate of potash (MOP) prices to strengthen only moderately, supported by comparatively better affordability. Nevertheless, higher freight charges, insurance costs and shipping disruptions linked to geopolitical tensions are expected to cap further price gains.

The report added that stronger biodiesel and ethanol blending mandates in Southeast Asia are expected to support palm oil prices and improve potash affordability for oil palm growers. Additional production capacity coming online in Lao PDR and Belarus should gradually improve supplies, although European buyers are expected to remain dependent on Canadian exports because sanctions and quota restrictions continue to affect Belarusian and Russian supplies.

FAO also noted that fertilizer affordability remains under pressure despite early signs of price stabilisation. Elevated energy costs, transportation bottlenecks and geopolitical uncertainty continue to weigh on purchasing decisions, especially for the upcoming 2026/27 planting season in Europe and North America, where buying activity for nitrogen and phosphate fertilizers has slowed considerably.