Fertiliser Market in Ukraine: 2024 Overview

The fertiliser market in Ukraine continues to face considerable challenges due to ongoing geopolitical tensions, logistical disruptions, and economic fluctuations. However, despite the hardships caused by the war, the sector is showing signs of adaptation. Key trends reveal a mixed outlook for the market as it evolves to meet the country's agricultural needs and international trade realities.

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Most Imported fertilisers

Ukraine relies heavily on imports for much of its fertiliser supply, with the primary products being:

• Urea
• Ammonium Nitrate (AN)
• Potassium Chloride (MOP)
• NPK fertilisers

The disruption of local production facilities due to the conflict has increased Ukraine’s dependency on imports, particularly from countries like Lithuania, Turkey, and Poland. Additionally, Belarus, which used to be a significant supplier, has been sidelined by sanctions, forcing Ukraine to source fertilisers from alternative markets.

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Price Trends and Impacts

The fertiliser market saw a steep increase in prices following the onset of Russia's invasion in 2022. By April of that year, the price of MOP surged by 53%, while Urea and Phosphate-based fertilisers also saw price hikes due to restricted access to key resources from Russia and Belarus. Prices began to normalise by early 2023, with MOP and urea returning to pre-conflict levels, dropping over 60% from their peaks.

While prices have stabilised, they remain volatile and are influenced by global energy markets. fertiliser production is highly dependent on natural gas, which has experienced price fluctuations.

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Logistics and Supply Chain Challenges

The ongoing conflict has severely impacted Ukraine's logistics network, which is essential for both importing fertilisers and distributing them domestically. Major shipping routes through the Black Sea have been disrupted, making it difficult for Ukraine to access global markets and receive fertiliser supplies efficiently. Railway infrastructure, which has historically been a vital means of transporting agricultural inputs like fertilisers, has too faced intermittent blockages, further complicating the distribution network.

Despite these issues, the Ukrainian government, along with private stakeholders, has made considerable efforts to adapt. Alternative routes via land through Poland and other neighbouring countries are being utilised, though at a higher cost. Air shipments have become more common for critical supplies, but bear in mind this remains expensive.

Market Outlook

The future of the Ukrainian fertiliser market remains uncertain but resilient. As domestic production capacities have been reduced, imports will continue to dominate the market, especially for key products like nitrogen-based fertilisers. However, the reliance on imports increases Ukraine’s exposure to global market fluctuations and logistical constraints.

The demand for fertilisers is expected to rise as Ukraine’s agricultural sector begins to stabilise and recover. Farmers are adapting their planting strategies, with many opting for crops that require less intensive fertiliser use due to high costs and uncertain availability.

In particular, crops like soybeans, which require less nitrogen than corn or wheat, are becoming more popular, potentially altering fertiliser demand patterns.

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Noteworthy News and External Impacts

One of the most significant external factors impacting the fertiliser market is the ongoing sanctions on Russia and Belarus. These two countries are among the world’s largest producers of fertilisers, particularly MOP and phosphate-based products.

Sanctions have led to trade restrictions, and while countries like Brazil and China have sourced from alternative markets, Ukraine has been heavily affected due to its geographical proximity and historical trade ties.

Moreover, energy markets, particularly natural gas, play a critical role in fertiliser production. As Europe navigates its energy crisis, future gas prices will have a direct impact on fertiliser costs globally, including in Ukraine. Additionally, any developments in the Black Sea grain corridor or new trade agreements could alter the dynamics of Ukraine’s fertiliser imports.

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Conclusion

While the Ukrainian fertiliser market faces numerous challenges, it is also showing resilience and adaptability. The ongoing conflict has reshaped the way fertilisers are sourced, priced, and distributed, but with stabilisation efforts underway, the market is expected to recover slowly. As Ukraine continues to play a vital role in global grain production, the need for a steady and affordable fertiliser supply will remain paramount for its agricultural success in the coming years.