Domestic fertilizer output slumped in February 2024. According to the core sector data, the index for fertilizers stood at 113.30 in February, losing 9.51% compared to same month last year. The index also tanked around 16% on a monthly basis and marked its lowest level in nearly two years. This drop could be linked to the seasonal trends as normally the output tends to turn lower at the start of the year.

Global fertilizer market seen expanding at decent pace

According to a latest update from ResearchAndMarkets.com, the global fertilizer market reached US$ 192.56 Billion in 2023 and is expected to reap a valuation of US$ 250 Billion by 2030. The report titled  "Global Fertilizer Market, Size, Forecast 2024-2030, Industry Trends, Share, Growth, Insight, Impact of Inflation, Company Analysis”  says thatfrom 2024 to 2030, a compound annual growth rate (CAGR) of 3.8% in the global fertilizer market is anticipated.Fertilizers play a pivotal role in present-day agriculture by improving soil fertility and boosting crop yields.

In contemporary agricultural practices, where international food demand is escalating, fertilizers offer crucial nutrients like nitrogen, phosphorus, and potassium, ensuring the most effective plant boom. They enable farmers to maximize productivity, meet increasing meal requirements, and mitigate the effects of environmental challenges. Fertilizers contribute considerably to sustainable and green farming, helping a developing populace and ensuring global food safety in the face of evolving climatic and demographic demanding situations in modern agriculture practices.

Government rules and subsidies considerably influence the fertilizer market, exemplified by projects like the USDA's $500 million fertilizer production expansion program in 2022 to reinforce home production, rural activity advent, and farmer options. The application's funding was elevated to $900 million in response to demand by June 2023. Similarly, in 2022, India's Department of Fertilizer carried out schemes like the Urea Subsidy Scheme, Nutrient Subsidy Scheme (NBS), and Direct Benefit Transfer (DBT) to ensure sufficient fertilizer availability for farmers.

Urea imports falling

India’s urea imports are falling in recent months.Total imports of urea, which are regulated by the government, stood at 6.4 million tonne in the first 10 months of FY24. India’s import and consumption of urea, a key crop nutrient, has dropped for the first time in decades on the back of higher domestic production of nano urea. Total imports of urea, which are regulated by the government, stood at 6.4 million tonne in the first 10 months of the ongoing fiscal year, compared to 7.3 million tonne in the corresponding period a year ago, a fall of 12%. Imports had peaked to 9.8 million tonne during 2020-21. As part of a broader policy paradigm to limit fertilizer subsidies and promote natural and organic farming, the government has been running PM-Pranam, a scheme announced by finance minister NirmalaSitharaman in her 2023-24 budget speech.

Outlook:

The overall demand trends over next few months will be thin with the major uptick seen only in the kharif season starting in June. A lot will depend upon when the kharif plantings start given the likelihood of a scorching summer season this year. The price trend remains very choppy for fertilizers with wholesale price index for manufacture of fertilizers standing at 141.90 in February 2024, up 0.42% on month and recording a drop of 3.27% compared to February 2023. A significant push to demand will come only when the prospects of kharif planting season become slightly clear.