Don’t get caught waiting for prices to continue falling. Experts say that now is the best time to book your farm’s fertilizer needs for the 2014 crop.
Experts say it’s a buyer’s market for fertilizer
Fertilizer has dropped to its lowest level in years and will likely stay that way, at least through December and early winter. Experts say that it makes economic sense to book fertilizer needs now.
"I would go ahead and pre-pay 2014 fertilizer needs," says Jeff Greseth, CHS vice president, crop nutrients supply.
Davis Michaelsen, Pro Farmer Inputs Monitor editor, agrees. "It’s a buyer’s market, but buyer’s markets don’t last," Michaelsen says. "We’ve seen a couple of soft bottoms, but the supply side is working right now to hold prices at the low end."
"Urea is a bargain, down 25% from year-ago levels. It’s the nitrogen source of the future."
Producers who wait too long to book their fertilizer needs take some risk. Once planters roll, nutrient prices typically hit their stride en route to the spring peak, Greseth says. Because of that, he advises booking no later than early January.
While price declines vary by product, across the board, fertilizer is 15% to 25% below year-ago levels. Supplies are rising faster than demand as fertilizer manufacturers have ratcheted up production, natural gas prices remain low and a reduction in corn acres is expected.
Gary Hergert, University of Nebraska agronomist, adds that as the price of corn goes down, urea follows. The same goes for other fertilizer products, too. Prices are influenced by everything from the unwinding of potash cartels to the prospects of political unrest.
Shop Around. It might pay to do some comparative shopping. In the Nebraska Panhandle, a survey of four urea dealers found a $170-per-ton range—from $480 to $650 per ton in late October, Hergert says. There are also huge differences among states. For the week ending Oct. 25, the average farm price for anhydrous was $658 per ton in Iowa, but in Michigan it was $839 per ton, according to Pro Farmer’s Inputs Monitor.
To get the best bang for your buck in the future, Dave Schwartz, SFP vice president, says you might consider using less ammonia and more urea. "Urea is a bargain, down 25% from year-ago levels," Schwartz explains. "It’s the nitrogen source of the future."
Last year at this time, urea prices were $600 per ton. By year’s end, David Asbridge, NPKFAS president, looks for urea prices of $430 en route to a seasonal low in the $420s by mid-winter. Come spring, he expects prices to peak near $455 per ton, but no major increases.
Asbridge looks for UAN to bottom out at $340 to $345 per ton by early winter. UAN supplies aren’t as burdensome as urea and ammonia; therefore, UAN prices have softened less. Last fall, UAN peaked at $440 per ton. Come April, UAN could be 15% to 25% higher than in December, which is why he thinks booking soon makes sense. "There could be a demand surge for UAN and urea next spring if wet conditions west of the Mississippi River continue through fall," Greseth says.
Pressure on Ammonia. As for ammonia, Asbridge projects prices to be $620 to $630 per ton by December—that’s $220 less than year-ago levels.
Look for a low of $620 per ton in early 2014, but by April, Midwest average prices might move into the $655- to $660-per-ton range.
"I expect a good fall season for ammonia," Asbridge says. If Mother Nature interferes, spring ammonia prices could actually decline, due to rising inventories and farmers switching to more urea and UAN in the spring, he explains.
- December 2013