That's the view of leading agri-banker Rabobank in its latest quarterly review of the world fertiliser market.

Rabobank said global benchmark prices for nitrogen and phosphate fell by more than 20 percent during the December quarter.

Urea was hit hardest as the soft commodities market was caught up in fears the EU debt crisis would continue to cause economic pain and panic around the world.

However the big Dutch-owned farm lender said world stocks of fertiliser and grain were tight, which was putting a floor in the price of both commodities.

For example, world corn stocks were nearing a 40-year low, which would increase demand and encourage farmers to strive for maximum yields in 2012.

Rabobank tipped the price of urea and potash in the first quarter of 2012 would stay around their levels at the end of the December quarter ($US368 and $US490 a tonne fob respectively) while DAP would decline from its pre-Christmas level of $US465/t.

However, market sentiment and the direction of fertiliser prices would be influenced by any further developments in the EU's debt turmoil, Rabobank said.

Brazil and the US now had reasonable stocks of fertiliser while the supply chain in Europe was relatively empty.

Any quick restoration of farmer and investor confidence had the potential to significantly increase pressure on fertiliser supplies, which had been hit by ongoing unrest in the Middle East and North Africa.

China, which has about 40pc of the world's urea capacity, wasn't expected to lift a 110pc tax on its exports until June, which would help underpin world prices although new urea manufacturing capacity was expected to soon come on line in Algeria and Qatar.

Exports from Egypt have now resumed after recent political unrest in the country closed the port of Damietta.

China has also imposed a 110pc tax on exports of phosphates (to keep a lid on its domestic fertiliser prices during seasonal high demand), which wasn't expected to be relaxed until May. however, supplies from other sources, including Saudi Arabia, Russia and the US, should keep markets well supplied, Rabobank said.

The short-term world price outlook for phosphates was neutral to weaker, the bank said.

No significant movements in current global potash prices were expected in the first three months of 2012.