Analysis: Corn and soybean harvest is at least half done and farmer interest in fall-applying nitrogen is creeping higher. As interest in anhydrous application increase, so are prices. We expect good anhydrous demand this fall, but not at the level seen in the fall of 2011.
Corn acres will probably be down a bit from 2012 next year. East of the Mississippi River, there are many reports of very disappointing yields in corn-on-corn fields. There are some similar reports west of the river, but many in Iowa and points further north and west are wondering why there is so much talk about the corn-on-corn yield drag. Still, we've heard more than a little talk out of Illinois, Indiana and Ohio (especially Illinois) that growers are looking to move closer to a 50-50 corn-soybean mix. That will likely hold back corn acres (at least a bit) for 2013.
Another factor limiting buying interest in the nitrogen market right now is the time of the year. It would normally be the end of October before most growers are in a position to start fall tillage and fertilizer applications. But since harvest is about three weeks earlier than normal, many farmers are waiting for the seasonal cool down before applying nitrogen.
Soil conditions are also limiting fall-season nitrogen demand. Dry soils don't hold anhydrous as well as moist soils... and very few Corn Belt fields qualify as "moist" right now.
Advice: Keep track of weekly trends in nitrogen values, but if you're in buying mode right now, be sure to check all your suppliers for the best deal. That might seem obvious, but price checks are more important this year than in most. There are some significant price differences within crop districts right now. For example, central Iowa has an anhydrous price low of $765/ton and a price high of $845 with an average of $799. If you can get the $765 anhydrous, book it. But, stay clear of the $845 and even the $800 anhydrous.
Also, if your soils are receptive to (and able to hold) nitrogen right now, we encourage you to do fall application. Many are planning to delay nitrogen applications until spring 2013, which means spring supplies will be tighter and prices will likely be higher than they are this fall.
This is a tough market right now. Normally, we would have advised booking nitrogen weeks ago. But with uncertainty about how well the soil will be able to hold nitrogen and with warmer-than-normal temps the "new norm" for 2012, being too aggressive with fall applications might be a mistake.
Position: The price trend is up. Book your fall nitrogen as needed, but some very good "deals" are available. Check the range of prices in your crop district and if you can book nitrogen below the average price, book all your needs. But don't get too aggressive in applying nitrogen until the weather straightens out!.
Analysis: Price ranges are much more narrow for DAP and MAP than for nitrogen. Fundamentally, there are plenty of reasons to expect lower prices ahead. If you had below-average yields this year, that left some P & K in the soil, reducing your need to apply P & K for the 2013 corn crop. That's something you won't know until soil tests are complete, but early results are confirming this.
Internationally, P & K demand is extremely uncertain. India normally buys the bulk of its P & K needs at this time of the year, but has been absent from the market so far this year and apparently won't be booking needs until March 2013. That's removing a significant chunk of demand from the international market and limiting upside price risk at this time right here in the Midwest.