Urea market flips from shortage to surplus; govt import scheme questioned
Updated June 24 2026 - 2:35am, first published June 23 2026 - 4:00pm
Australia's urea shortage panic attack is rapidly morphing towards an oversupply problem as nitrogen fertiliser wholesale prices sink to about $950 a tonne - down from $1390 early this month.
Three months ago fertiliser resellers were being urged to book in their commitments for the cropping season at local port prices hovering between $1410/t and $1450/t.
More price falls are tipped as the global market anticipates the release of a backlog of Persian Gulf product by spring, with more tonnages being loaded now, despite ongoing shipping disruptions.
At the same time, the federal government's emergency fertiliser import underwriting efforts are making the local market even more distorted, according to retailers who want Canberra to halt the initiative.
They said the $7.5 billion Fuel and Fertiliser Security Facility (FFSF) had created a dangerous, uneven playing field at the farm gate, effectively providing a taxpayer-funded price protection shield for three big importers at the expense of other players servicing 65 per cent of the domestic market.
The government has been accused of failing to do enough homework to realise the local urea pipeline was largely heavily booked with high-priced import commitments before the FFSF scheme began.
Retailers and independent regional importers who responded to the industry's early calls to lock in buying orders in March are furious their own capital was spent on purchases from other international suppliers and they must now wear the price fall consequences, while Incitec Pivot Fertilisers, CSBP and Summit Fertilizers remain protected.
We are now being forced to compete against subsidised giants safely flushing low-risk cargo into the market - Son Nguyen, Rich Farm Agri
"The government is absorbing the downside shock for the multi-billion-dollar corporate tier, while independent operators are trapped holding high-priced inventory bought in good faith to keep Australian farms running during the crisis," said Melbourne-based Rich Farm Agri's chief executive officer, Son Nguyen.
"We are now being forced to compete against subsidised giants safely flushing low-risk cargo into the market."
The first 47,000 tonnes of Incitec Pivot's underwritten urea purchase from Indonesia was unloaded in Brisbane this week, although there was no mention of its underwritten landed price.
Mr Nguyen, who secured urea from Vietnam in March to fill his Victorian resellers' winter-spring customer requirements, said Canberra's FFSF mechanism had inadvertently failed to provide long-term, equitable price relief to farmers, and was penalising independent supply chains.
He has urged federal Agriculture Minister, Julie Collins, to replace the underwriting scheme with a direct rebate scheme for farmers.
It could cover any fertiliser bought during the current geopolitical volatility period, rather than funnelling 100pc public support to one third of the market.
Having been burnt by the loss of millions of dollars in urea earnings by the underwriting scheme, fertiliser retailers now fear it will be phosphate prices and supplies that could next spin into disarray, and soon.
Limited availability of phosphate and particularly sulphuric acid is set to intensify pressure on ammonium phosphate prices in coming months, just as Australian summer crop planting demands ramp up and farm orders for next year begin rolling in.
However, having seen urea values unexpectedly subside in the past two months, resellers are worried international suppliers will be reluctant to commit to the skewed Australian marketplace.
Unless they are one of the few receiving government underwriting cheques, most of the nine international suppliers of fertiliser into Australia are unlikely to risk offering cargoes of MAP and DAP - Heath Boseley, Australian Fertiliser Services Association.
"Our big concern is that unless they are one of the few receiving government underwriting cheques, most of the nine international suppliers of fertiliser into Australia are unlikely to risk offering cargoes of MAP and DAP," said South Australian reseller, Heath Boseley, Pinnaroo.
"They know their competitors will potentially have a landed price advantage."
Mr Boseley, the chairman of the Australian Fertiliser Services Association, said while some growers were paying their suppliers for urea they committed to during the early March rush, others had baulked as they saw international prices fall.
He said an online feedback meeting last week involving the Department of Agriculture, Fisheries and Forestry representatives and more than 100 retailers and importers again tried to highlight the inequitable market situation and the crippling costs now facing some "mum and dad" fertiliser businesses.
"The government seems to be in denial. The response was basically, 'nothing to see here'," Mr Boseley said.
"Unfortunately I don't think the government understands where the loss sits because they didn't really look into the effect beforehand.
"A lot of people in the farming community don't know where the loss sits, either - it's just lower cost N to them."
AFSA members alone secured an estimated 100,000t of urea in autumn, only to find those volumes were now worth about $400/t less.
That equated to as much as $40m in inventory costs AFSA resellers would have to absorb if customers decided to buy cheaper imports.
The local urea price's week-by-week slide has reflected an increasingly bearish global nitrogen trade mood worldwide as this year's price spikes continue to dampen global demand.
At the same time, potential orders are being delayed in the hope of an end to turmoil in the Persian Gulf which would unblock big fertiliser supplies to the trade.
As much as 1m tonnes of urea have been estimated to be trapped aboard vessels stuck in the Strait of Hormuz.
International fertiliser broker and analyst, Stein Haugan, at Singapore-based Fertimetrics, said last week's signing of a US-Iran memorandum of understanding added downward pressure to the urea market, with Iranian FOB shipments reportedly as low as $US345/t and US Mississippi port prices at $US340.
In April global prices were about $US935/t.
Mr Haugan said urea producers in the Middle East were continuing to load export shipments, increasing the risk that a sudden release of product could "further materially disrupt global trade balances".
However, he also noted shipping experts had warned it may take months after an agreement on shipping movements through the strait resulted in normal vessel flows resuming.
While global phosphate prices had mostly stabilised between $US900/t and $US935/t (CFR), he said buyers were pushing for reductions despite "exceptionally tight supply and historically high raw material costs".
