Rising costs and EU carbon policy pressure fertilizer markets
A new RaboResearch report warns that global fertilizer demand is entering a contraction phase as rising input prices reduce affordability. The fertilizer affordability index has declined sharply, signalling tough conditions for farmers worldwide in 2025 and beyond.
According to the report, global fertilizer prices increased by about 15% between April and September 2025. Phosphates recorded an even higher rise of nearly 19%, causing the phosphate index to drop to -0.74, the lowest in 15 years. Nitrogen prices also fell, and the index is expected to decline further into 2026, particularly affecting countries in the Northern Hemisphere.
“While there is a case to be made for prices to be well-supported from current levels, record production in major production areas like Brazil and the US is overwhelming the market with supply,” said Fonseca. “This will keep prices depressed in the short-to-medium term. Challenging profitability in the grain and oilseed sector portends poor fertilizer affordability and potential decline in fertilizer use in the coming year.”
At the same time, the world’s grain and oilseed output is at record highs. Global corn, wheat, and soybean production reached new peaks in 2025, with strong consumption but persistent oversupply. This abundance is keeping commodity prices low, squeezing farmer profits, and reducing fertilizer affordability.
Looking ahead, Europe’s Carbon Border Adjustment Mechanism (CBAM) will reshape fertilizer trade in 2026. The CBAM introduces a carbon tax on roughly 15 million metric tons of nitrogen fertilizer imports each year. High-emission products such as ammonia and urea will face major price increases.
Importers are preparing by sourcing low-emission fertilizers and using carbon hedging strategies. As 2026 approaches, farmers may face another year of limited profitability and cautious fertilizer use.
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