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Farm Futures survey: Growers are more concerned with sourcing chemicals, parts, and revenue opportunities this spring.

Jacqueline Holland, Grain market analyst

April 6, 2022

7 Min Read
Tractor and toolbar pulling anhydrous tank in corn stubble
Getty/iStockphoto/chas53

USDA issued its first weekly Crop Progress report of the 2022 growing season on Monday. It’s still too early in the growing season for markets to be influenced by planting rates. But there are plenty of other factors giving farmers cause for concern this spring, according to the March 2022 Farm Futures survey.

The survey, conducted via email questionnaire Feb. 28 – March 17, spanned 973 farmers from across the country. It found that only 9% of growers were planning on significantly changing crop rotations in 2022, down from 18% last year on high input costs.

As noted in other Farm Futures March 2022 survey articles, farmers were especially sensitive to rising input costs this year, which are double last year’s expenses for most crop budgets in the Corn Belt. Worried about costs and supply chain constraints, many growers locked in fertilizer prices back in December 2021.

And even though 72% of growers still had nitrogen, phosphate and/or potash applications on the to-do list this spring, an astounding 84% of survey respondents reported being able to obtain the fertilizer supplies in the form (liquid, dry, anhydrous) desired for the 2022 growing season.

So will farmers face fertilizer shortages this spring? Likely not.

A multitude of compounding factors driving fertilizer prices higher last year helped to spur a production increase at the wholesale level coming in to the 2022 planting season. Retailers maneuvered past supply chain headaches by adjusting inventory management strategies to account for longer lead times and larger volumes.

Related:How to find spare parts when you need them most

Plus, the expected acreage expansion for 2022 doesn’t seem likely to happen because of high input prices. Last week’s Prospective Plantings report from USDA found 2022 principal crop acreage at 317.4 million acres, a fractional 0.07% increase from last year. But it will keep a cap on U.S. fertilizer demand – thus prices – through the spring 2022 planting season.

Those are key factors that have kept retail fertilizer prices from surging higher through the first few months of 2022, even in the wake of Russia’s military invasion of Ukraine. An index of bi-weekly fertilizer (NPK) and fuel prices in Illinois found only a 0.9% increase in retail NPK and diesel prices since the war’s onset in February 2022.

Who is worried about fertilizer then?

A recent Rabobank report noted that Russian banking sanctions prohibiting the country’s fertilizer exports “will not have an immediate impact on food prices and/or food production.” Rabobank explains that spring fertilizer supplies were procured prior to the war in the Northern Hemisphere, which was an underlying theme of the Farm Futures March 2022 farmer survey.

Related:5 graphs to explain USDA’s 2022 planting forecasts

While the U.S. planting season will  largely unhindered by fertilizer shortages, South American growers are likely to feel the earliest signs of the pain of Western banking sanctions imposed on Russia.

Russia and neighboring Belarus comprise 40% of the world’s potash exports, now inaccessible due to banking sanctions. Brazil’s 2023 soybean crop to be planted this fall will need potash supplies by September to ensure trendline yields.

Prior to the war, Brazil sourced over half of its potash supplies from Russia. In the weeks following Russia’s unprovoked invasion of Ukraine, Brazil negotiated deals with Canadian potash producers to procure supplies for the 2022/23 growing season.

“We can and must strengthen our ties and strengthen long-term partnerships, with a view to ensuring stability and profitability for all links in the production chain,” Brazil’s minister of agriculture, Tereza Cristina, announced last week.

Free from shortage worries? Not exactly

With fertilizer worries largely put to bed this spring, Farm Futures survey respondents were still anxious about other inputs’ availability. Nearly a third (31%) of farmers expect planting delays this spring due to interruptions in obtaining crop inputs.

Surveyed corn growers expect a 26% chance of planting holdups because of supply chain issues. Soybean farmers are slightly more optimistic, pegging that probability at 25%.

Chemicals are the primary source of concern, with 24% of farmers expecting delivery delays for time-sensitive herbicide supplies. Growers ranked chemical supplies (29.5%) as the top input at risk of being delayed this spring, followed closely by equipment and parts (28.5%).

Which item is most likely to be delayed on your farm this spring?

While farmers expressed the most concern about chemicals, the scramble to source adequate equipment and parts ahead of the season is a timelier issue in farm country right now. When asked which item was more likely to be delayed to the farm this spring, growers narrowly favored equipment and parts (50.4%) over chemicals (49.6%).

While some chemical applications are not necessary for a few more weeks (depending on an individual farm’s growing plans), parts are essential to get planters rolling. Farmers overwhelmingly expect supplies of these inputs to cause more significant problems than other items in the survey.

Fertilizer (23.5%) and fuel (11.1%) supplies were ranked a distant third and fourth. Farmers are the least worried about obtaining seed supplies for the 2022 growing cycle, with only 7.5% of total responses expecting seed delays relative to other inputs.

In a write-in question on the March 2022 survey, drought and weather worries were widely lamented as points of concern for 2022 production hopes. As of last Tuesday, nearly 70% of U.S. land was classified in some abnormally dry to exceptional drought condition, with the Plains and Upper Midwest enduring continued dryness.

Paying for it

Even though growers are increasingly worried about input uncertainty this spring according to Purdue University’s latest Ag Barometer readings, our survey finds they are taking advantage of high commodity prices to offset some of the pain. Only 27% of growers had forward-priced enough 2022 production to ensure profits as of mid-March 2022. In the January 2022 Farm Futures survey, only 13% of growers had locked in 2022 profits via forward pricing.

But some hesitancy remains in hedging amidst volatile commodity markets, even with new crop corn futures setting contract highs at the $7 per bushel benchmark on Tuesday morning. About 46% of growers in the March 2022 survey reported hedging crops in the past two or more years before they were harvested. That figure was about 1% higher a year ago.

Corn growers are primed to take advantage of market rallies. More growers are holding on to old crop supplies compared to last year in hopes of a robust summer export season. Growers have also priced out more new crop corn – as well as next year’s crop – than last year.

Percent of corn crops priced - March Farm Futures Survey

Last week’s Quarterly Grain Stocks report from USDA suggested that corn growers would likely be rewarded with summer rallies, based on record usage rates between Dec. 1, 2021 and March 1, 2022.

Survey results for soybeans and wheat tell a similar story. Growers do not want to miss out on supply-driven rallies that could be at play this spring as restricted edible oil and wheat supplies in the Black Sea create potential domestic production and export opportunities for U.S. growers.

Percent of soybean crops priced - March Farm Futures Survey

But December – March soybean and wheat usage came in on the low end of market expectations. Slower exports this past winter, largely from reduced Chinese demand, and high prices could potentially cap further demand expansion for both soybeans and wheat.

That’s not deterring growers from locking in 2023 pricing though. The March 2022 Farm Futures survey saw a 4.5% jump in volumes of wheat already priced for next year’s crops, suggesting that U.S. wheat growers are not going to leave any profit opportunities on the table over the next year amid soaring wheat prices.

Percent of wheat crops priced - March Farm Futures Survey

About the Author(s)

Jacqueline Holland

Grain market analyst, Farm Futures

Holland grew up on a dairy farm in northern Illinois. She obtained a B.S. in Finance and Agribusiness from Illinois State University where she was the president of the ISU chapter of the National Agri-Marketing Association. Holland earned an M.S. in Agricultural Economics from Purdue University where her research focused on large farm decision-making and precision crop technology. Before joining Farm Progress, Holland worked in the food manufacturing industry as a financial and operational analyst at Pilgrim's and Leprino Foods. She brings strong knowledge of large agribusiness management to weekly, monthly and daily market reports. In her free time, Holland enjoys competing in triathlons as well as hiking and cooking with her husband, Chris. She resides in the Fort Collins, CO area.

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