October 21, 2009

2 Min Read

Production costs for Arkansas’ major row crops for 2010 are mixed, with fertilizer expected to drop, while seed, pest control and energy prices remaining stable to slightly higher, according to Scott Stiles, Extension economist-risk management, for the University of Arkansas Division of Agriculture.

“Fertilizer prices are down significantly from one year ago,” said Stiles. “In 2008, fertilizer prices climbed to record highs in tandem with commodity prices.

“High commodity prices tend to increase the demand for fertilizers. In addition to high crop prices, energy prices also reached record levels in 2008. Natural gas and other fuels are part of the fertilizer manufacturing and distribution chain.”

Since the first quarter of 2009, prices of nearly all fertilizer products have fallen dramatically, with nitrogen- and phosphorus-based fertilizers declining the most.

The spike in fertilizer prices led to decline in nitrogen and phosphorus use in North America from 2008 to 2009 in the range of 15 percent to 20 percent. Potassium fertilizer application is estimated to have declined around 30 percent, industry sources have said.

Seed prices were generally higher for the 2009 crop.

“Biotech traits continue to influence the seed industry, product offerings, and prices,” Stiles said. “From October dealer survey information, corn seed prices for 2010 will range from stable to slightly higher, depending on the brand.

“Some company products are expected to be up as much as 10 percent, with some being down by the same percentage. Soybean seed pricing will be similar, with some companies expected to lower 2010 prices by 5 percent to 10 percent and others increasing by a like amount.”

Due largely to glyphosate resistance in Palmer amaranth and other weeds, growers will be exploring additional herbicide options in 2010, which could translate into higher prices for some weed control tools. In 2009, glyphosate‐based herbicides increased significantly.

However, prices are expected to decline in advance of the 2010 crop. Monsanto said recently prices for its Roundup brand herbicides could be as much as 50 percent below 2009 levels, Stiles said.

Economic growth in Asia and conflict in oil producing regions will keep oil prices moving. However, “given the prospect of a global economic recovery in 2010, current projections from the Department of Energy’s Energy Information Agency indicate that the price of West Texas Intermediate crude may be more than $12 above last year’s average price per barrel.

“With this outlook, farm level diesel prices for 2010 are likely to increase by roughly 20 percent,” Stiles said.

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