Fertilizer Market Rebounds After Years of Decline

After a three-year downturn, Argentina’s fertilizer consumption experienced a notable resurgence in 2024, climbing by 7% year-on-year to reach 4.9 million tons. According to estimates from Fertilize Civil association and analysis by Az Group consultants, this rebound marks the third-highest consumption level ever recorded in the country. This positive shift signals a renewed vigor in the agricultural sector, driven by a combination of favorable environmental factors and strategic planting decisions.

Key Factors fueling the Increase

Several factors contributed to this remarkable growth. Primarily, adequate soil moisture levels at the start of the 2024/25 wheat season enabled farmers to expand planted areas and increase fertilizer submission rates. This proactive approach,capitalizing on favorable conditions,played a crucial role in boosting overall consumption.

The Rosario Board of Trade (BCR) estimates that the area dedicated to wheat cultivation grew to 6.3 million hectares in the last cycle. This represents a 6.8% increase compared to the 2023/24 campaign and a 6.6% increase compared to the average of the last decade. While the total area planted with corn decreased from 7.9 to 6.6 million hectares, a larger proportion of early plantings, which require more intensive fertilization, further contributed to the increased demand for fertilizers.

Import Reliance and Key Suppliers

Argentina relies heavily on imports to meet its fertilizer needs. In 2024, over 65% of the country’s fertilizer consumption, approximately 3.2 million tons, was sourced from abroad. Morocco emerged as the leading supplier, followed by China and the USA. The reliance on imports highlights the importance of international trade relations for Argentina’s agricultural sector.

Positive Outlook for 2025

Looking ahead, the az Group projects a positive outlook for 2025, anticipating that local fertilizer consumption will surpass 2024 levels, driven by intentions to expand cereal planting. Early indicators for 2025 already show accumulated phosphate imports at record highs, while urea imports are at their third-highest level ever.

Price Relationships and Purchasing Power

The purchasing power of grains in relation to input costs varies considerably across different crops. Sunflower producers currently enjoy the most favorable conditions, with expectations of a 400,000-ton increase in harvest, possibly reaching 4.7 million tons. According to consultants, despite some challenges, strong local market prices create favorable purchasing relationships, particularly for certain service categories.

While price relationships have generally weakened, corn producers maintain a good purchasing capacity for agrochemicals and fertilizers. However, high freight costs pose a significant challenge for cornstarch producers, impacting their overall campaign expenses. As one consultant noted, the services, structure, and diesel show the most negative price relationships.

Challenges and Considerations

Despite the overall positive trend,challenges remain. High freight costs, particularly impacting cornstarch producers, and negative price relationships for services, infrastructure, and diesel, require careful consideration. Addressing these challenges will be crucial for sustaining growth in the agricultural sector.