Aug 21, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin

High Fertilizer Prices to Persist

November 16, 2011
By: Ed Clark, Top Producer Business and Issues Editor

Methods exist to stretch your dollars, though

Sky-high fertilizer prices are likely to remain a reality into 2012 and supplies should be plentiful, for the most part.

"I see flat to slightly higher fertilizer prices," says Dave Schwartz, national sales manager of SFP. "The market has stabilized." It’s not likely to go down like it did in 2008, he adds.

Fertilizer supplies should be plentiful, with two exceptions: liquid 10340 phosphorus and sulfur, Schwartz says. "If you want to apply 10340 starter, I’d book it and pay for it now," he encourages. "It appears that supplies might be only 75% of demand."

If actual fertilizer costs in 2012 reach the $162 per acre projection, it will be the second highest on record for central Illinois farms with high-productivity farmland, says Gary Schnitkey, University of Illinois farm management specialist. Actual fertilizer cost was $124 per acre in 2010 and is projected at $150 for 2011. Since 2007, fertilizer costs have been above $100 per acre, with the peak of $185 reached in 2009.

"While fertilizer prices have changed over time, it is not likely that fertilizer price declines will lead to per acre costs below 2010 and 2011 levels," Schnitkey says. "Higher fertilizer costs continue the trend of higher production costs for corn, leading to higher break-even corn prices necessary to cover costs."

Less Cost Per Acre? There’s another way to look at it, however, Schwartz says. Growing 200 bu. corn per acre at $6.50 per bushel provides a gross return of $1,300 per acre. Using phosphate prices of $750 per ton, potash at $665, anhydrous ammonia at $820 and ammonium sulfate of $420, it costs a farmer 40 bu. to 45 bu. per acre for fertilizer, assuming 80 units of phosphorus, 100 units of potash, 200 units of ammonia and 20 units of ammonium sulfate.

High Fertilizer Prices to Persist
Actual fertilizer costs for high-productivity farmland are projected to reach $162 per acre in 2012, which would be the second highest level on record.

"That’s a better deal than in past years," Schwartz says. "When corn prices were $2 to $2.10, it took more bushels per acre to cover fertilizer cost. People don’t often look at it that way, however."

Emerson Nafziger, University of Illinois agronomist, agrees that nitrogen costs relatively less with today’s corn prices. For the past 10 years, 1 bu. of corn has been worth about 10 lb. of N, but today 1 bu. will buy about 12 lb. of N, he says.

Fertilizer prices have become more volatile. "The fertilizer market is a global market and changes with crude oil prices," Schwartz says.

Farmers need to book the price of their commodities at the same time they lock in their fertilizer prices, he suggests. "There is no longer a booking program from August through February like there used to be."

Fall-Applied Nitrogen Risks. One way to cut costs is to use a variety of management practices, with reducing nitrogen losses at the top of the list. For example, as rainfall patterns change in the Corn Belt, there have been more nitrogen losses from fall-applied nitrogen.

"If trends continue with rainfall, it will be harder to recommend fall-applied nitrogen," says Dan Kaiser, nutrient management specialist at the University of Minnesota. He suggests applying as much nitrogen as possible in the spring.

Because late summer and fall were so dry and the corn crop shut down early, there might be more carryover nitrogen available for next year’s corn crop than normal, says Jeff Coulter, University of Minnesota agronomist. He suggests split nitrogen applications as an option for enhancing corn use efficiency, with some nitrogen applied at planting and the remainder applied as sidedress, depending on soil tests.

"The combination of split applications and stabilizers are really making a difference," Schwartz says. "We’re picking up significant yield increases and using less nitrogen." Producers who used to apply 200 lb. in the fall are now using split applications, reducing total nitrogen by 20 lb. and boosting yields 25 bu. per acre, he says.

Previous 1 2 3 Next

See Comments

FEATURED IN: Top Producer - Mid-November 2011

Log In or Sign Up to comment


No comments have been posted



Receive the latest news, information and commentary customized for you. Sign up to receive the AgWeb Daily eNewsletter today!.

Enter Zip Code below to view live local results:
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by|Site Map|Privacy Policy|Terms & Conditions