Renewed fears for the world economy are to put the brakes on the rebound in fertilizer prices, Rabobank warned, in the second caution within hours of a "wait-and-see" attitude emerging among farmers.
While nutrient prices look set to increase in the early part of the October-to-December quarter, helped by demand from South American growers during corn and soybean sowing periods, "further rises are likely to be modest", the bank said.
Falling crop prices had reduced farms' "ability to absorb" fertilizer prices which have recovered strongly from a nadir in early 2009, if not returning to record levels reached in 2008, at the peak of the last spike in farm commodity prices.
Potash prices were, at the end of last week, 38% higher than a year ago, with urea values soaring 56%.
Furthermore, world economic uncertainties, reflected in falling farmer confidence besides tumbling share and commodity prices, looked set to stem purchases.
"Buyers and end users may prefer to adopt a wait-and-see approach to future fertilizer prices, due to the global macro-economic uncertainty," Rabobank analysts said.
The caution came hours after Gary Anderson, chief executive of North American silos manufacturer Ag Growth International, also identified a "wait-and-see attitude in many farmers' purchasing behaviour", although he attributed the change to uncertainty instilled by difficult growing weather.
"First delayed planting, then a hot dry summer and now highly variable weather conditions as we enter harvest have resulted in lower-than-anticipated yields and reduced crop production forecasts," he said.
'Demand will soften'
Phosphate prices looks particularly vulnerable, with production from Saudi Arabia's Ma'aden plant "ramping up" near its annual capacity of 3m tonnes of diammonium phosphate, one of the two main forms of phosphate as used in fertilizers.
"Export shiploads are gathering momentum," the bank said, noting India, Pakistan, Thailand and Vietnam as target markets.
After an initial rise in demand prompted by seeding periods, phosphate "demand from large import regions will soften, and as such prices are expected to decline".
The outlook for the urea market looked firmer, boosted by an exit of China from exports, expected at the end of this month, but which may come "even earlier according to market speculation".
"The global urea market is expected to remain a seller's marketing during the fourth quarter, meaning urea pricing will remain high."
While failing to publish an outlook for potash prices, Rabobank highlighted that a further drawdown was expected on already-tight inventories in the quarter, "since most of the production is already committed".