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Higher Fertilizer Prices Ahead

November 4, 2010
 
 

USDA projects a national average corn fertilizer cost at $124.26/acre in 2011, up from $119.72 in 2010; and soybeans, $22.46, up from $21.64.

A large Iowa farmer quotes similar costs: $126 for corn next year versus $115 this year and soybeans at about $59 both years, excluding $8 for lime. The prices he plugged in:
Product (ton) 2010 2011
NH3 $425 $500
DAP $450 $525
K20 $550 $470
 
Of course, nitrogen prices are well above that level now, and many expect them to rise further into spring. Fertilizer prices are influenced by transportation costs, raw material input costs, the value of the dollar and increasing concentration in the fertilizer industry, reports USDA economist Wen-yuan Huang. Recently the falling dollar made imports more costly and exports cheaper to the importing country. “The resulting increased foreign demand for phosphate fertilizers may have affected U.S. supply,” he says.
 
An unofficial USDA forecast is that strong fertilizer demand due to higher corn and wheat prices will underpin fertilizer prices; ammonia prices may stabilize in the long term due to large domestic natural gas supplies; spot barge rates for ammonia from the U.S. Gulf are more than $400/ton, a third higher than last year; prices for muriate of potash imported from Vancouver are just below $400/ton, below last year but expected to rise sharply due to low inventories and strong global demand; central Florida DAP price, at $400/ton is double last year and is expected to remain firm.
 
Farm Journal Economist Bob Utterback suggests fertilizer will be even more expensive in 2012. “Farmers may want to consider a shift to more corn acres in 2011 and back to soybeans when corn production costs are even higher the following year,” he says.
 

 

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RELATED TOPICS: Farm Business, Crops, Inputs, Fertilizer

 
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