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Future of Fertilizer Optimistic

November 14, 2012
By: Ed Clark, Top Producer Business and Issues Editor

River problems could spook prices, however

Fertilizer is the one input that promises to be a better buy in 2013 than it was in the past year—$10 per acre cheaper, according to University of Illinois projections. You can thank rising global production and supplies, which at the moment are outpacing demand.

Fertilizer experts report adequate supplies for the coming months, but
encourage producers not to wait until spring to make all of their purchases.

In no way does this suggest that you should delay all of your fertilizer urchases until spring. Experts give two reasons to buy sooner rather than later:

1. After losing money on inventory in 2008, dealers changed how they receive supplies to  just-in-time delivery. As a result, waiting until the last minute to book all of your supplies is risky.

2. The extremely low Mississippi and Ohio rivers delayed and in some cases halted fertilizer shipments this year, making it tough for supplies to reach their destination on time. This is one reason for the tight supplies and firm ammonia prices in late October.

Jeff Greseth, director of crop nutrients supply and trading for CHS, says supplies should be  adequate, but that doesn’t rule out spot supply constrictions between now and spring.

Greseth doesn’t expect fertilizer prices "going crazy," in part because of increasing global supplies of key fertilizer inputs.

Wild Cards. Weather, however, could be a real game changer. Prices could ratchet up in a hurry if we have a dry spring, barges remain backed up on the Mississippi and Ohio and corn prices escalate. Demand is another wild card, particularly in China and India.

Does this mean you should hit the panic button and buy all of your fertilizer needs today? No, according to David Asbridge, president of NPK Fertilizer Advisory Service. He and Greseth agree that you should book at least a percentage of your key fertilizer inputs this fall, especially  nitrogen, even if you don’t plan to apply it until spring.

For urea, Asbridge predicts spring prices in the Midwest to average $595 per ton, $15 less than late October. "There is no reason to expect any big run-up," he says.

For ammonia, Asbridge expects to see fall prices in the $825 range, slightly higher than the  expected spring price of $820. All this, he says, depends on demand.

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FEATURED IN: Top Producer - Mid-November 2012



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