Sep 19, 2014
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January 2014 Archive for Inputs Insights

RSS By: Davis Michaelsen, Pro Farmer

Inputs Monitor Editor Davis Michaelsen adds his perspective into the happenings of the inputs markets.

The Global Spin, Inaugural Issue

Jan 31, 2014

The Global Spin is a new column I intend to update each week. I present this inaugural issue as this week's blog, simply because there is much to say and I would hate for you to miss it. With all the foul weather and high home heating prices, a distraction on this Friday hits us just right. Look for the Global Spin on your Inputs Monitor each Friday for stories of note from around the world.

Ukraine -- The demonstrations continue in Ukraine and the violence is escalating. Opposition leaders and pro-E.U. journalists have been disappearing, and then reappearing days later after having been questioned and tortured by unnamed assailants who are trying to get at who is financing the opposition. Earlier last week, two demonstration leaders who had disappeared were found in the woods near Kiev, one, Yuriy Verytsky had apparently frozen to death, but both carried the wounds of torture.

A law was enacted on January 16 aimed at repressing free speech and assembly, and has since been repealed. Prime Minister Mykola Azarov has stepped down and many fear the government is unraveling. The 2014 Sochi Olympics will keep Russia busy and behaving, but many fear what could amount to a humanitarian crisis in the weeks following Sochi, and neighboring countries fear an all out assault could lead to civil war and a rush of refugees fleeing Ukraine in search of respite from the potential for violence.

Meanwhile, Ukrainian President Yanukovych has called in sick. His doctor's note cites acute respiratory illness and high fever as the reason for the President's indefinite leave, but speculation includes a wide range of possibilities.

PotashCorp -- A number of global items of note came up Thursday during a conference call hosted by PotashCorp. The company expects to ship 55-57 million tons of potash worldwide in 2014 and has already noted strong shipments to Latin America and a cautious inventory stance in the United States.

  • Trinidad is expected to improve ammonia production to 3.9-4.1 billion cubic feet per day in 2014. Scheduled maintenance at ammonia production facilities has been completed successfully and the outlook is for stable to stronger ammonia production ahead.
  • India has 350,000 tons of potash to purchase between now and March in order to fulfill it's 1.2 million ton obligation to Canpotex but new government subsidy policies may heat up demand there for potash, which has lagged nitrogen by a wide margin in Indian fertilizer applications. Very little potash was positioned in India at the start of this year.
  • China is expected to increase potash imports as well and PotashCorp CEO Bill Doyle believes China is nearing the end of its domestic potash resources. P&K revivals in India and China -- expected sometime around 2016-'17 -- would excite global demand and encourage potash production. China has noted publicly that one of its main concerns is for domestic food security and in order to add to food stores, they realize sound agronomy and balanced soil nutrition will have to lead the way.


Egypt -- Egypt has made a concentrated effort since 2007 to increase export activity to the United States. That has included nitrogen fertilizer and, like Ukraine, Egypt is a key swing producer, providing UAN solutions in particular to U.S. markets.

Under the previous regime headed by Mohammed Morsi, General Abdul-Fattah el-Sisi was named defense minister by Morsi. It was Sisi who led the charge against Morsi on the peoples' behalf, and it is Sisi who now appears poised to take over leadership of Egypt. The 2011 end of the Arab Spring was expected to mark the start of a more democratic, less militaristic form of government. If Sisi is named President in upcoming elections, efforts to separate the military and the national politic will have come to an end.

But Egypt is at the heart of the struggle between Muslim ideals and western style democracy and the future president, whomever that may be, will have to contend with an elite class looking to restore their former privileges, strong support for the ousted Morsi, terrorist insurgency, public protests for both sides and a forward thinking business community that is anxious to put political struggles behind the pursuit of commerce.

Relations between a Sisi administration and the United States could be tenuous if he is elected as Sisi has noted publicly that he is more than displeased with the response to the turmoil from Obama's office. However, large scale industry including fertilizer production is believed by the majority of Egyptians to be a crucial rung on the ladder to national economic and political success and stability. Sisi has enormous popular support and it is thought that the people of Egypt would embrace Sisi's way forward.

Libya -- The leader of Libyan rebel forces who have taken over eastern crude oil export locations is thought to be losing his grip on the situation and many suspect the number of his militia is well below the 20,000 he claims to have mustered. The people of Libya are anxious to revive their once bustling and profitable oil export industry, but rebels under the leadership of Ibrahim al-Jathran have held three eastern oil export ports blockaded for six months now, slashing Libya's oil export revenues.

Jathran's own followers are now beginning to question his ability to lead and the wisdom of keeping such valuable resources off the global market to make a political point. Most, in fact, question what the point of it all even is.

Jathran had agreed on December 10, 2013 to open the ports to commerce on Dec. 15, but has so far failed to do so, raising the ire of his followers and fueling the efforts of those who wish to restore commerce and export revenues to the North African crude hub.



LP -- Who's Asleep At the Switch?

Jan 24, 2014

A shortage of propane? Really? The United States has been found to sit atop enough petrol-resources to fuel its own economy, and hydraulic fracking has made it possible to access those resources efficiently with minimal environmental impact. It would seem its the perfect setup. And yet, we find ourselves lacking in domestic propane supplies, to the point where officials are unapologetically recommending rationing supplies, just as we add 'Polar Vortex' to our national weather vocabulary, and temperatures dip dangerously low.

Picture3This did not come out of nowhere. Sources including your Inputs Monitor had been warning about a late, wet crop that would have to run through the dryer at 2013's harvest. The agricultural community saw heavy LP demand coming a mile away, and yet, as we are asked to now ration LP at -10°F, exports to Mexico, China and Japan continue. This is profiteering at the expense of the safety of American homes, for the sake of inflated export sendout prices.

Somebody's asleep at the switch. EIA reports for the week ended January 17, 2014, propane and propylene exports at 370 thousand barrels per day (tbbl/d). That's up from 160 tbbl/d during the same week last year and 120 tbbl/d during the same week in 2012.

Exporters did the same thing with WTI crude earlier this summer and drove the price of U.S. crude to levels that rivaled -- and even overtook -- the Brent crude price. Strong stocks of gasoline amid lagging U.S. gasoline consumption mitigated the impacts on the average consumer. But crude producers were able to send WTI crude out onto the global market, capturing the much higher global price.

The same thing is happening with propane now, but the impact is much different. Exports of propane exit the U.S. via Mont Belvieu, Texas and the price there has historically carried roughly a 3 cent premium to the Midwestern supply hub at Conway, Kansas. But those numbers reversed and as exports climb, the Conway price -- domestic price -- has overtaken the export, Gulf Coast price.Picture1

EIA notes, "Because global prices for propane are significantly higher than U.S. prices, propane supplies will continue to move to Mont Belvieu for export. Midwest propane prices will rise to keep marginal supplies in the region when they are needed."

We understand that weather conditions caught us all a little 'off-guard' in the transition from Autumn to Winter, but the depletion of affordably priced LP from Midwestern markets for the sake of capturing the higher global price is absolutely irresponsible.

Nobody knew the Cochin -- supplying LP sendouts from Canada -- would be shut down in November and December? Nobody heard the Ag community recommending to beef up LP supplies in anticipation of a wet harvest? Nobody exporting propane saw this coming? Again I wonder, who was asleep at the switch here?Picture2

In the here and now, we are stuck. Prices continue to climb. Yesterday I spoke with AgriTalk's Mike Adams about the whole mess and I said, "Prices are quickly adopting a three dollar handle." We have received reports that Midwestern prices are up a full dollar from that already today and we fully expect a five dollar handle by early next week.

We are already fielding mutterings about wood stoves and alternatives to LP for next winter and the propane industry should expect some form of push-back for the position it has left us in.

Right now, domestic energy seems to have adopted the teen pop star model of winning hearts and then disappointing and embarrassing fans with behavior that is wildly irresponsible and dangerous to society. When my daughter sees Miley Cyrus now, all she sees is a dissapointment with a foam finger who, on TV, acted the way her daddy told her never to act. My daughter is ashamed at Miley Cyrus and Justin Bieber's behavior, and she is right to be taken aback by those who would draw us in with a shimmering smile, and then let us down.

With the current propane situation so driven by exports amid domestic supply shortages, is domestic energy independence the next Justin Beiber or Miley Cyrus? ...the next one to win our hearts, and then spew profanity at authorities for having the audacity to break up a DUI, drug-induced Lamborgini street race through residential neighborhoods?

Give us hope for energy independence and then export our savings and ask the American farmer to ration heat on the farm under the weight of a Polar Vortex. What good is a wealth of resources if those who need it most cannot access it when and where it is needed? Currently, its midnight in Beijing and the local temperature is 34°F; Tokyo is at 43°F; Mexico City at 54°F on its way to a high today of 63°F. Currently Minneapolis- St. Paul, MN at 26°F, headed for 20 below by Monday.

UAN, Urea, Phosphate Threaten Rally

Jan 17, 2014

... and just like that, the tide turns. We have been awaiting the annual upturn in fertilizer prices and based on a number of conversations today, we have changed our stance on UAN, urea and phosphate. I caught wind of some increases in UAN and urea and pursued the lead by phoning my industry braintrust including wholesalers, retailers and even a New York investment guru.

All indications are that UAN and urea may have bottomed and today we note prices have already started to climb in many Midwestern locations. That prompted an ALERT from your Inputs Monitor to increase spring coverage on UAN, urea and phosphate to 50% with the chance of more aggressive bookings next week.

Corn futures moved higher last week on the barrage of USDA reports that tightened supplies enough to move futures higher. Agrium reports this week that U.S. importers feel they have fallen behind on urea imports and have increased their pace. That demand strength has inflated wholesale pricing, and that wholesale price is now making it downstream. At the same time, domestic nitrogen production has been slow, behind the prior year.

Increases in the urea price have also led to strength in UAN solutions and as I was consulting with my braintrust this morning, a Pro Farmer Member called me to report his local UAN32% price had gone up enough to grab his attention. He wondered if he shouldn't lock in the new price ahead of more increases. The answer was absolutely, yes.

We wrote earlier this week that we are wary of industry headfakes and that we intend to keep our feet in the present environment of rumors and declines. But I cannot argue with the facts. Fertilizer prices are reportedly moving higher at retail depots, and the annual runup appears to be 'on'.

At the same time, phosphate demand from South America, China and Europe has led to a $75.00 per tonne increase in Tampa DAP prices since November. The current commodity climate has growers threatening to cut P&K applications by half -- if they apply at all in the spring. Given the falloff in P prices over the late summer and through fall, phosphate now looks poised to reclaim price strength where it can get it and as inventories ramp up for the coming application season, new pricing points have been set in the context of high export demand.

Another market assumption is lurking behind the scenes. Many have thought a portion of corn acres will be switched to beans until corn prices trend higher. However, soybean futures aren't giving growers much to be enthusiastic about, and Informa's new numbers added back nearly 2 million planted corn acres from previous estimates -- now projected at 93.319 million acres to corn, down roughly 2 million from 2013, and 81.264 million acres to beans, up 4.7 million acres from 2013.

Fertilizer prices in the spring may play a role in planting decisions in the spring. If nitrogen can be bought at a favorable price, the ratio between corn and bean acreages may be impacted. The weight of fertilizer prices at a low on the decision making process is unclear. On one hand, affordable nutrient prices are the result in large part to declines in corn prices. However, production and supply features are taking over UAN, urea and phosphate and fertilizer is now threatening to rally with-or-without corn's approval.

Retailers today reported price increases. Wholesalers are behind schedule on imports, and competition for nutrient on the global scene is high. The standdown that characterized fall demand looks like it has come full circle and importers will now have to race to satisfy nitrogen and phosphate demand for spring and summer. The relationship between expected new-crop revenue is stronger on anhydrous and potash, as we have shown. It makes sense that those two are absent from today's ALERT, and the word is to let NH3 and K bleed a little longer.

But now is the time to manage risk on UAN, urea and phosphate for spring. We do this by booking portions along the way. But another ALERT will appear early next week if prices continue to suggest upward velocity, and given the late hour at which fertilizer has chosen to rally, we expect price increases could be fast and furious, and hold through spring.



Outlook 2014 -- Fertilizer & Fuel Plus Charts

Jan 10, 2014

Looking ahead to 2014 in fertilizer carries a measure of uncertainty, but that is not new. Identifying where the greatest amount of price risk lies will be an important part of the decision making process in 2014. We know corn prices are low and barring a major event impacting the global supply situation, the expectation is for corn prices to remain range-bound. The good news is that fertilizer prices followed corn to the current low and we can show you that declining commodity prices does not have to mean declining fertilizer rates.

P&K offer the most demand uncertainty. In my small circle of farm friends the consensus is to limit P&K spending. Chip Flory met last week with a group of Iowa growers and came back with a survey that noted they expect to spend about half this year on P&K compared to the prior year. Part of that is on the price break, but prices have not fallen year-over by half, indicating that the cutback is also influenced by declining expected returns.

Nitrogen demand is expected to be stable and early buyers may be able to front book carryover product from fall before suppliers restock. Fresh inventory carries with it fresh price flexibility, and fresh price risk. We would like to position ourselves ahead of the restock if we can.

Anhydrous -- NH3 carries a good amount of upside risk heading into the spring applicationPicture51 season. Jack frost chased combines down the rows in northern territories and cut the window short in many areas. This will add to spring demand, but has also left a certain amount of carry in the market. We want that carry product if we can get it.

Wholesale ammonia has been very stable and production at export locations has been relatively smooth. With cash corn at $4.20 this week, 175lbs of nitrogen from anhydrous gives you the most bang for the buck, especially when coupled with in-season UAN applications.

We look for NH3 to follow corn prices almost to the letter. We do see some upside risk for spring and expect spring prices to incrementally firm above today's, on pace with restock on the local level.Picture3

Urea -- Chinese spare urea production capacity has ballooned to 20 MMT and the global oversupply will continue through spring. Expect to book urea on a downward path, and we are in no hurry to book here just yet. With stable ammonia and global stocks bulging, urea will continue to fall and will also help to limit UAN pricing. Urea pricing has been driven by that Chinese oversupply more so than by corn prices since the decline started in 2012.

Nearly half of the urea produced in China is from manufacturers owned by coal or gas companies. Energy integrated urea production is extremely competitive on the global scene, and that will continue to limit price strength for urea through spring.

We look for urea to trail for the knowable future. While the downtrend has slowed, we do not expect prices to climb. We may leave urea to hand-to-mouth purchases this spring. Hold for now.

UAN -- Of the nitrogen products we survey, UAN solutions (28% AND 32%) have fallen the leastPicture5 year-over, this week down only roughly 65 bucks to anhydrous' $230.00. That signals price risk ahead. We actually believe UAN may be at a floor. Wholesale markets have ticked higher, but a demand push here could be a month behind anhydrous. That may give us the time we need to capture some savings, but the more I think about it, the closer I am to pulling the trigger on a portion for spring/summer.

Limiting price strength in UAN will be stable urea and ammonia. If we can keep those two key feedstocks under control, prices should settle in right around year-ago, but that would leave $65.00 on the table, and spring/summer demand is expected to be above year-ago.

Watch for an upcoming Monitor ALERT on that soon.

Potash --Picture2

We chronicled the sad tale of the Belorussian Potash Company (BPC) as it unfolded through the last half of 2013. The breakup of BPC -- provider of 43% of the World's potash -- had Uralkali and Belaruskali threatening each other's export revenues with market oversupply. In response, stock values in North American potash producers fell roughly 20%. Shareholder shakeups at Uralkali have satisfied Belaruskali's demands and the joint venture may restart in the coming weeks. But Russia and Belarus are already involved in Vladimir Putin's Customs Union and that may have already eliminated the need for BPC to reunite.

Potash may turn out to the the biggest casualty of declining crop prices and the expectation is for growers to lean on banked K for the coming year. Prices are expected to trail through January and bottom sometime in February, but this will be a demand driven market in the spring and while we will book a portion for spring this winter, we will look for a late spring dip to fill coverage.

Overhang in Saskatchewan is still in place, although it has been trimmed substantially. That will help limit prices and if manufacturers believe growers intend to cut back, price strength will be hard to come by. This may actually turn out to be another year to build K in the soil, banking for 2015.Picture6

Phosphate -- We see the least amount of upside risk in phosphate. Domestic production and sideways movement in wholesale feedstocks will insulate pricing in North America. Also limiting price strength is India's declining rupee which has delayed purchases and, like American growers, Indian growers are not expected to belly up for much P&K. That will pull the plug on global prices and may lead to domestic price cuts here at home.

Adding to the uncertainty surrounding P&K is the fact that accurate soil tests are hard to come by and may freeze growers in 'spray and pray' mode. As with potash, demand will hold sway here in the spring and price strength will be a measure of growers' confidence in a futures rally on the corn side.

Like urea, we expect to book phosphate on a downward path for spring. We will look for breaks this winter to fill portions, but prepare to book hand-to-mouth here as well in the spring.Picture7

Farm diesel -- Farm diesel is very near our go-zone right now. We observed a January price break last year and the same appears to be true in the present day. We have yet to see prices bottom and the ALERT from the other day was aimed mostly at Indiana growers where farm diesel carries a two dollar handle. However we believe the regional low is yet to come... but it won't be long and at the first sign of a reversal, we will cover at least half of spring needs.

Declining crude oil prices will help limit upside risk for ruby red, but distillate supplies are currently very low and export demand for distillate fuels is climbing. Add to that competition for farm diesel with home heating oil and a cold winter could snap prices higher with little warning.

If your appetite for risk allows you to book on the backside of a chart hook, now is a good time to cover up to 30% of spring needs. We expect that hook in the next few weeks, but the trouble with waiting is that by the time the chart hooks, it will be as an indication that prices have rolled higher. We like $3.40 for spring 2014 but that may be optimistic.

LP -- Much of the U.S. corn crop came in wet and demand for dryePicture8r fuel caused delivery problems that resulted in skyrocketing prices. The situation is not likely to improve in Minnesota where a pipeline that services 40% of that state is switched from propane transit to supply dilutant to Canadian tar sand operations.

That has more northern propane traveling via rail and truck and will add to the expense of the product. Officials in Minnesota are recommending increasing on-farm storage in, and it wouldn't be a bad idea for us all to increase our storage capacity so we can take better advantage of price breaks.

Year-on-year data points squarely to July as the seasonal low and we will hold out as long as we can for that day. Spring pricing is hard to pigeonhole and we expect wide variation in pricing across the Corn Belt. National supplies of LP are in pretty good shape, but like with farm diesel, LP for agricultural use competes with home heat.

For now, avoid purchasing LP and wait for the July break. But do not run out as deliveries have been delayed since harvest. If you have to purchase between now and July, avoid a full fill. Instead, fill what you will need to get through and no more.

Perspective -- We see high risk for price increases by spring in LP and UAN solutions and moderate risk for NH3 and potash. Phosphate and urea carry low risk of price strength and may be best booked hand-to-mouth for immediate use in the spring. Farm diesel is right about where we would like it to be and with the exception of Indiana, I'd like to see if some more air will come out of the price in the next week or two.

Declining commodity prices could lead to declines in P&K but nitrogen demand is expected unchanged from the prior year. As we look ahead to 2014, we keep the Dec. '14 contract on our radar and hope for the best. We will continue our strategy of booking portions along the way, and in the coming weeks and months look for ALERTS from your Inputs Monitor.

2013 in Review

Jan 03, 2014

From the end-user's perspective it turned out to be a great year for fertilizer. Ammonia was priced high through the spring but as heavy rains took their toll on the Midwest, the way forward to nutrient reduction was forged on the back of split UAN applications. In-season sidedress was as popular as ever and now USDA, EPA and state Departments of Agriculture look ahead to combating nutrient runoff with more efficient N applications with the agile, versatile and mobile UAN. I have included our featured headlines in green. Click the headline to link to the story.

Corn Emerges in Central Iowa, What the Color of Corn Can Tell You

Corn prices fell off and new-crop returns are expected to remain depressed by ample supplies and stronger than expected 2013 crop yields. This has industry watchers projecting a falloff in corn acres in the coming year, but the reductions would not do much to decrease N demand, removing less than 1 million tons of projected demand. However, the U.S. will remain reliant in imports for at least another calendar year and as mentioned above, UAN is expected to do a lot of heavy lifting as uncertainty in corn futures favors split applications.

Capture Savings on Inputs While Corn Futures Doze

The tragic explosion in West, Texas continues to weigh on the minds of regulators and legislators. California Democrat Barbara Boxer carried the torch to a number of committees and President Obama forwarded an executive order to tighten fertilizer regulations. This is, however, a necessary shift in perspective. After 911 and the Oklahoma City Bombings, purveyors of Ammonium Nitrate adopted a mindset of security. Methamphetamine makers targeted anhydrous tanks across the heartland, punctuating the need to increase security at fertilizer depots.

Explosion at Texas Fertilizer Facility Claims Lives, Several Injured, West Texas Trojans Host Season Opener

After the explosion in West, and subsequent other accidents, the focus of regulators shifted from security to safety. In the coming year, retailers will be subject to greater scrutiny on the part of regulators and would do well to tighten-up in anticipation of upcoming inspections. Much of the reporting about fertilizer that followed the April Texas blast got it wrong. On more than one occasion, fertilizer was blamed for grain dust explosions and wood chip fires, making it easy for regulators to believe that fertilizer is more dangerous than it is.

Geismar, LA Olefin Plant Explosion, News Reports Fault Fertilizer for Grain Dust Explosion, Cedar Chips Smolder Disconcertingly -- Fertilizer Looks On

Senator Boxer, EPA to Probe Texas Explosion at June 27 Hearing, Obama Orders Tighter Fertilizer Regulations

The July breakup of the Belorussian Potash Company rippled around the globe and stock in potash producers tumbled as Uralkali threatened to oversupply the market in an effort to secure marketshare. I maintain that the timing is more than a little suspicious. At the same time Uralkali shocked the market with its resignation from the joint venture, U.S. corn prices took a dive, suggesting U.S. fertilizer prices would be where they are today either way.

Potash Shakeup: Teasing the Bull Behind the Fence

The CEO of Uralkali was jailed in Belarus facing up to ten years in a Belorussian gulag. But a stock sale from vilified Uralkali investor Suliemon Kerimov inspired Belarus to move CEO Baumgertner to house arrest, and to later extradite the then dethroned CEO back to Russia where he remains under house arrest today.

Uralkali CEO Detained in Belarus for Abuse of Power, Minsk Looks to Recoup $100 Million from Uralkali

PotashCorp CEO Bill Doyle very publicly chided the BPC breakup as the "Dumbest thing he had ever seen," and it now appears the joint venture will patch things up and resume communal operations. Meanwhile, PotashCorp was forced to make cuts in both production and workforce that amounted to 18% reductions for each.

BPC to Service K Demand -- India Tags Discount, The True Future of Global Potash Pricing

Energy was a wild ride as well and this year saw WTI pricing overtake the Brent price for a short time and as crude constraints in Libya, Iraq and other OPEC nations mounted. U.S. Crude producers were more than happy to ship LLS crude to global markets, bypassing stops at Cushing, OK, tendering crude on the global market via NOLA. WTI prices ran well above $100.00/barrel during the summer, but in a tasty irony, gasoline consumption in the U.S. has fallen, ethanol production is booming, and gasoline prices fell despite the increases in domestic crude oil pricing.

Petroleum Report: WTI Forges A New Kind of Parity, Keystone XL Pipeline May Raise Midwest Gasoline Prices

Natural gas has been divorced from nutrient pricing as not enough nitrogen is produced here in the United States to impact pricing. But several nitrogen producers are positioning themselves to open greenfield facilities along with expansions to existing capacity. However, even with increased production capacity based on inexpensive shale gas, the U.S. will still rely on imports for an unknown portion of demand.

Between The Shale & A Hard Place, EPA: Fracking is Cleaner Than Once Thought, Poll Results: Most Americans Oppose Natural Gas Exports

Winter came on quick and the mercury headed south in a big hurry. Natural gas responded by running higher, and as demand spiked, drawdowns in national storage exceeded expectations with regularity, holding natgas futures at the top end of their annual range, where they remain today. We look for natgas to reverse later this spring when temperatures ease, but today, the parts of the nation that are not choked by fresh snow are in the deep freeze with northern regions eyeing record low temperatures. That will keep natgas demand -- and prices -- high near-term.

More Energy links...

U.K. Shale Boom A Drop in the E.U. Bucket

Adjusted Blend Lowers Quality of Ethanol, Big Oil Pockets the Change

California Oil Explores Hydrofluoric Acid Solution

On the farm it was a difficult spring for most. Just about the time the crop was in, the rains we needed last year showed up in spades and ponded out swaths of corn. That washed nitrogen out and led many to lean on split UAN applications.

Rain-Soaked Fields Revisited, When the Application Window Shrinks, Planning is the Best Fertilizer

Some believe fertilizer manufacturers were due for comeuppins this year and blame artificially high priced product from Canpotex for elevating fertilizer prices above market value in 2008. The three Canpotex players were forced to pay settlements in Illinois to settle the allegations out of court.

Canadian Ag Titans Settle Out of Court

On farm propane delivery hung some growers out to dry. The late planted crop came in wet and needed to run thorough the dryer before it could be stored and marketed. That late season demand spike inflated LP pricing above $1.80 in Midwest averages. A Minnesota propane pipeline will be diverted away from LP transit to service shale operations, forcing LP deliveries and shipments to move by rail and truck, adding expense. We expect LP pricing above last year's pricing, but have noted an annual dip in July. We will look to pick up some propane then. Officials from the Minnesota Propane Gas Industry suggest increasing LP storage on your farm in the coming months.

NPK Outlook: Forget Fertilizer -- Book Some Fuel, Bank P&K From Manure, Consider N a Bonus, On-Farm Fertilizer Storage Considerations

The biggest issue for fertilizer this year has by far been nutrient reduction. I have spoken personally with Iowa Secretary of Agriculture Bill Northey on the topic several times and as agricultural states look to reduce the flow of N&P into the watershed, management practices on the farm will need to include more efficient nitrogen applications. USDA Economic Research Service believes growers can maximize yield while minimizing N loss with the implementation of split applications -- there's that UAN again.

Northey believes that the Environmental Protection Agency will not impose blanket regulations aimed at nutrient reduction as long as farmers participate in the effort voluntarily. Some would like to see conservation compliance tied to crop insurance, and that may turn out to be the hook EPA is looking for. But compliance often comes with enforcement, and the federal government really cannot afford to fund an enforcement entity that would have to check under every tarp on every farm for poorly placed manure piles or other infractions.

I do know one thing those in power want -- they want your data. They want to know your rates, how and when you applied fertilizer... they want to know how much N&P was removed by the previous crop, and where and when you spread manure. Retailers, they want to know how much fertilizer you have on hand, how much you have delivered, applied, where, when, how, all of the above and more. My advice on conservation compliance and nutrient reduction is to get your mind around the fact that EPA and USDA want to know the details of your operation.

To be honest, the idea gives me the creeps and I know I am not alone in that. But regulations will come if voluntary efforts at nutrient reduction are not observed and put in to practice. If you are already making efforts let me encourage you to start documenting those -- perhaps start a 'conservation file' in case regulators one day come knocking, asking, "what have you done so far."

Nutrient Reduction -- Grassroots Effort to Hold Regulation at Bay, Voluntary Efforts to Reduce Runoff Win Praise From Vilsack

Perspective: The perspective from January 1, 2014 includes uncertainty. Low corn prices are expected to stick around at least through the upcoming crop-year and some put the potential for a corn recovery in 2016. To the good, low corn prices will keep fertilizer prices low.

We expect fertilizer prices to stay where they are until demand picks up in the spring. March is in our bullseye right now and when the opportunity looks right, we will advise to cover spring nutrient. Watch out for UAN prices as spring and summer demand is likely to be high. I like anhydrous around $650 for spring, phosphate at $500 and potash pretty close to where it is now at $475/short ton.

Explosions, nutrient runoff, global intrigue -- fertilizer 2013 had it all. Expect fetilizer prices to mirror corn futures, and for nutrient demand to be strong this spring. Consider adding to your LP storage capacity and prepare for the day when your farm data may be worth its weight in gold. Thank you for reading this year and for making your Inputs Monitor part of your decision making process. We have big plans for the coming year, so stay tuned and, as always, safety first.


































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