5 Fertilizer Profit Tips For 2014

November 12, 2013 07:42 PM
5 Fertilizer Profit Tips For 2014

While fertilizer production costs have significantly fallen from last year, so have commodity prices. "You might still be able to find a few holiday bargains for prepaid fertilizer, but most of the good deals end in November," says Gary Hergert, University of Nebraska Extension soils specialist.

Following these five tips can help you achieve a profitable fertilizer program for 2014.

  1.  Follow a good soil testing program. It’s important to know macro- and micronutrient levels. Use the most efficient phosphorus application methods (starter or strip-till), sources and timing for nitrogen. Take deep soil samples for residual nitrate, and fine-tune nitrogen rates.
  2. Set realistic yield goals. Expected yield is the major factor in determining the nitrogen rate for corn. Use a proven five-year corn yield average plus 5% to account for hybrid and management improvements.
  3. Value and use manure sources properly. Manure is an excellent nutrient source for nitrogen, phosphorus and micronutrients. Seek out nearby sources of manure.
  4. Not all recommendations are the same. Recommendations from universities might seem conservative compared to commercial labs. Typically, university suggestions are based on research and on-farm verification, Hergert says. They are generally the most economical rates.
  5. Comparison shop. Look at different products and compare the actual cost per pound of nutrients. Work with a reputable dealer who can provide quality product, price assurances, timely delivery and well-maintained equipment. Service after the sale is also important.

Will Production Drop Prices?

Fertilizer analysts say a rash of new production plants will drive nitrogen prices down for years to come, reducing the cost of the biggest input expense.

This will lead to the first new North American production facilities since the 1960s. Many of the projects are for the U.S. market, which has the lowest natural gas prices in the world.

 "We’re about at the tipping point of seeing this cycle begin to turn," said David Asbridge, president of NPK Fertilizer Advisory. Rabobank reports that more than 65 new projects have been announced, which will expand global urea capacity  30% by 2020.

"The expansion is driven mainly by the exploitation of shale gas in the United States, new gas fields in Brazil, political incentives in India and low-cost natural gas in the Middle East and Africa," notes Rabobank analyst Rakhi Sehrawat.

However, there is doubt whether all of those projects will proceed. There is also a distinct possibility the industry will be overbuilt, which would drive down urea prices.

Neil Fleishman, Green Markets senior industry analyst, has compiled a list of projects
that are likely to come to fruition. His work shows world urea capacity could reach 285.4 million tonnes by 2017, up 89 million tonnes from last year’s levels. By contrast, demand is expected to increase 15 million tonnes during that same period

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