Pro Farmer's Midwest Crop Tour 2013 came to a close last night with a huge Rochester, Minnesota crowd in attendance. Scouts from the eastern and western legs of the Tour reported what they found and while this year's survey tallied yield potential rather than actual yield, we can draw some conclusions based on what the boots on the ground found.
Dryness was the number one complaint and right now, the thing these crops need is water. As the tour moved toward the center of the country, more and more nitrogen deficiency was observed. This was due to runoff from heavy June rains, and the ensuing ponding, which lasted for weeks in some areas.
We will not know what the actual yield will be until harvest -- don't count your chickens before they are picked -- but we do not need to. We can start to plan ahead on nutrient strategies with or without hard numbers, and even the most general observations from Crop Tour 2013 lend insight on the needs of the soil.
Knife and Fork --
There were several accounts of apparent nitrogen deficiency, and agronomists had warned of this as the rain fell early in the season. On the heels of last year's extreme dryness, the subsoil was the first to recharge and when it pulled rainwater through the soil strata, it took N with it deep into the soil profile.
I remember observing periods of quick recovery for lagging, short corn here in my backyard. Agronomists attribute this to healthy root systems and when root growth was strong enough to reach deep into the profile for nitrogen, plants sprang up like Dr. J. If nitrogen is the bread and butter of crop development, phosphate is the knife and fork. The nitrogen deep in the soil invigorated the plants when the roots grew deep enough to access it, thanks to phosphate.
Phosphate held the key to combating the downward retreat of N into the soil. With significant dryness making a comeback in the central and western Belt, a similar situation could arise in the coming spring and early summer where much appreciated rains become too much of a good thing, forcing N deep into the soil where only the bravest and most daring root systems can find it.
DAP/MAP Outlook --
In this week's Monitor Index -- DAP falls $12.12 to $584.60; MAP falls $6.42 to $617.38. Look for prices to edge lower in the next week or two.
The outlook for DAP and MAP in retail markets is very favorable for growers and despite MosaicCo and others observing strong applications over the past two years, inventories are high against year-ago and the five-year. Declining world ammonia prices along with insulated domestic P production in Utah, North Carolina and Florida will conspire to limit near-term upside risk for phosphate, and we recommend you take advantage. Even if you have banked phosphate over the last few years, the drought of 2012 left a wound that remains evident into this year, even after record or near-record rainfall early on.
Serendipitous K --
Another impact of the spring difficulties was uneven development and this could lead to disease on double cropped fields. As many central Belt fields tasseled unevenly, disease has had a chance to spread and while Tour scouts report little disease pressure on corn in the surveyed areas, the potential is real for some carryover here.
The concern again is the persistent dryness reported almost across the board on this year's Tour. Yield estimates for this year are much higher than last year's proven yield, but what will really help this corn crop unlock its full potential in the face of looming drought is a strong supply of soil K. With late season dryness a factor, early season dryness could be just as much a factor next spring. If we do not get significant rain and northern snows produce below expectations, moisture recharge will fall short and plants will need all the help they can get from potash next year.
Perfect! The Former Soviet Union shakeup comes at a good time and news reports from Minsk make it clear the two warring FSU potash producers will not come to terms. Wall Street had it that potash prices would fall dramatically, but Canadian suppliers do not intend to price themselves out of the money by trying to compete with FSU's volume-over-price strategy. PotashCorp CEO Bill Doyle noted in a conference call last week that one company does not set global potash prices. Having said that, he did agree that the oversupply expected out of FSU will continue to limit potash pricing in North America.
K Outlook --
In this week's Monitor Index -- Potash falls $12.73 to $573.80. More downside room expected over the next few months.
Here again we have strong inventories -- 17% above year-ago, but that is skewed because of the tremendous oversupply last year at this time. 17% over way too much is way way too much. Against the five-year, North American potash supplies are 37% above. These are both key indicators of limited pricing ahead, and will likely result in discounts to liquidate product and avoid production curtailments in Canada.
You need nitrogen -- that's an easy call no matter what your situation or where you are. If your N was washed out or sent deep, you will have very little carryover to count on. Those plots that didn't lose N to excess rainfall took N out of the soil the old fashioned way -- with corn. The industry expects weaker demand than last year on P&K which will limit pricing. Capitalize on that. News reports have suggested a plunge in global potash prices, but while sustainability is more of a priority here in North America, we do expect to see prices fall slightly from present levels before autumn applications.
We believe nutrient suppliers are in no hurry this year to refill inventories as prices just keep sliding. But at some point, suppliers and growers alike will have to pull the trigger and get some fertilizer spread. That day will likely come before prices fully bottom as ammonia softens, suggesting softening for DAP/MAP, and the FSU and China work their magic on potash pricing. The best plays will probably find themselves booking nutrient on a downward path, but with corn futures in the tank, that may encourage a larger volume of smaller bookings as growers look to spread the risk.
Deal with the uncertainty of weather concerns and N loss demonstrated on this year's Tour with P&K. Prices will make it a good time to bank phosphate and potassium, and soil conditions, already in need of water and nutrient, affirm the timing. Look to push P&K for the upcoming crop, and prepare for what weather may come.
Photo credit: D. Michaelsen, Inputs Monitor