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Serving: United States
Corn+Soybean Digest

Fertilizer Face-Off 2009

Global nitrogen (N) and phosphorus prices fell between October and November, leading many U.S. farmers to hope fertilizer prices might continue to drop until spring, says Robert Mullen, Ohio State University Extension fertilizer specialist. Farmers can still hope, but they should also hedge their bets, he advises.

“I'm not sure you can bank on prices continuing to go down much more,” he says. “Most producers are waiting until spring for lower prices, but there may be a rush on inventories then, which could push prices higher.”

With fertilizer prices likely to remain high, corn and soybean growers might consider taking some extra soil fertility tests, advises Mullen. “I'd encourage growers to collect a few extra soil tests to find out where you can realistically get by without applying more,” he says. “Right now, we're at the time when fall sampling usually stops, but growers can still collect samples next spring.”

Cold, wet conditions, combined with higher fertilizer prices, resulted in fewer fertilizer applications across the Midwest this fall, says Chad Hart, Iowa State University Extension economist. “We are well behind in fall fertilizer applications compared to most years,” he points out. “So, there will be some built up demand come springtime, which could lead to some supply issues that may actually increase prices.”

THE WILD CARD is how well the world economy holds up to support global food and fertilizer demand, says Hart. On the other hand, it typically takes quite a bit of time for a drop in world fertilizer prices to make its way back to the Midwest, he adds.

“Our input suppliers bought at the higher prices and need to cover their costs by selling as much as they can at those higher prices,” explains Hart. “It's just a question of who blinks first, the producers who are holding out for a lower price, or the retailers who are holding prices up to cover their costs?”

Fewer fall applications will likely add to the demand pressure on N fertilizers, particularly urea anhydrous ammonia (UAN) in the spring, says Doug Stone, Terra Industries senior vice president. “In the significant Corn Belt regions, UAN is normally the product that comes into play as an alternative to ammonia, because of its convenience of use compared to urea,” he points out. “The last thing that growers need to worry about is having the right soil moisture conditions to apply N. During a wet spring, UAN applications are much less worrisome than urea applications.”

Although N prices have fallen recently, the fertilizer industry will continue to cut production, if prices keep falling, he adds. “Globally, N prices have reset to a level that is below what is profitable for some marginal fertilizer producers,” says Stone. “For others, they've had to curtail production, which is a signal that we are nearing a market bottom.”

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