Fuel and fertiliser: How the fundamentals are looking in 2025

The volatility of the Covid-era is now in the rear-view mirror for most producers in 2025. But the mental toll of high-risk agriculture remains a constant pressure.

Key inputs such as fuel and fertiliser are approaching more affordable levels for farmers as the agriculture sector reachers calmer waters beyond the volatility of the Ukranian invasion and Covid supply chain disruptions.

But a number of factors looming on the horizon could throw a spanner in the works for farmers in 2025, with many farmers feeling the ever-present stress of high-risk farming.

Episode 3 analyst Andrew Whitelaw said the fundamentals for producers heading into 2025 felt positive.

“We’re well off the peaks, the fertiliser price is higher than the pre-peak rising in 2021 and peaking in 2022, but affordability is better due to grain prices,” Mr Whitelaw said.

“If fertiliser was $2000/tonne but you were getting $2000/tonne for your wheat … it comes down to your ratio of affordability.”

A number of factors should remain on farmers’ radar throughout he year, including the upcoming Trump presidency and the Russian wheat crop, Mr Whitelaw said.

“I’d say we’re in a more normal year but Trump could change everything. We don’t know what his policies are going to do. Large increases in energy prices has huge ramifications on our prices.

Andrew Whitelaw said input prices for producers were beginning to look less volatile after a tumultuous few years. Picture: Andy Rogers

“But looking at the fundamentals, we’re looking at a more normal year, with more normal grain and input prices, and we’re beyond the period of crazy Covid and Ukraine invasion.”

Pinnaroo grain grower Corey Blacksell said good grain prices and lower input prices should be kept within the context of increasing risk and pressures farmers are facing.

“The ability to pay should be relative to risk, and the risk is going up,” Mr Blacksell said.

“We’ve had a reasonable season, taking into account drought and frost, and we had a very good year particularly on wheat, but we cut even. We’re now talking yields only dreamt of 10 years ago. We’ve got capacity to pay after 2023 but the risk variable is so expensive, it’s easier to lose money.

“It’s mentally hard going. I saw it locally after the frosts, the mood of young lads. It turned out better than most thought but I saw the torment. It’s the mental side of things that’s starting to get people down.”

The Weekly Times analysed prices for key farming inputs in January 2025:

FUEL

The Australia Institute of Petroleum weekly petrol report for the week ending January 5, 2025 showed the average petrol price for the week was 186.9c/lt.

Crude oil prices have returned to below USD$80 a barrel, Mr Whitelaw said.

Average diesel prices in Australia (at terminal) sit at 174c/lt, the same level it was same time last year.

Mr Whitelaw said while pricing stabilisation was good news, “pricing is still well-above historical values”.

“Prior to 2022, diesel had not been higher than $170c/lt, since then, it barely dropped below that level,” Mr Whitelaw said.

“There are also concerns about the future lack of refining capacity, with almost complete reliance on imports.”

GLYPHOSATE

Prices for glyphosate have been trending lower, having hit high levels in 2021-22 before levelling back out to average, Mr Whitelaw said,

“There is pressure in China at the moment as production capacity has grown in recent years, causing falls in pricing levels.”

FERTILISER

Urea prices in the past two years averaged about $600 a tonne, substantially below the highs of 2021-22 off the back of the war in Ukraine, Mr Whitelaw said.

The current price for January is calculated at $650 a tonne.

ENERGY

Gas prices have also shown a similar trend, having spiked during the initial stages of the Ukrainian invasion, due to large volumes of gas imported by Europe into Russia.