CHEAPER sea freight and mining costs, courtesy of lower global energy prices, have changed price fundamentals for fertiliser, aided by a surge of gas availability in North America and a lot of new urea production in China.
In the Middle East, a major urea producer drawing on the region's oil and gas reserves, prices have been trending down for the past two years from February 2014 peaks around $US375 tonne to near $US200.
Mining and freight costs for phosphate rock in North Africa and potash from Canada have also benefited to some degree from lower fuel costs.
Fertilizer Australia executive manager, Nick Drew, said while global demand played a big part in the eventual price paid by farmers, lower energy prices reduced input expenses for fertiliser makers, also allowing older, factories to stay in production.
London-based mining, metal and fertiliser market analysis specialist CRU Group has pointed to a big increase in nitrogen production capacity from coal-based gas production in China (the world's biggest exporter) and extra urea capacity in the US using newly tapped gas reserves.
Lower priced European gas from Russia would almost certainly lower ammonia and urea production costs.
Although demand for Chinese output was weaker in significant cropping sector markets such as South America, China was still pumping nitrogen fertilisers into global market at values that were actually below their cost of production.
Global demand for phosphate had also weakened with reduced import activity by Brazil and India.