Fertilizer Decision Time

01:32AM Aug 27, 2014
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( Lindsey Benne )

Strike a balance between crop needs and price

The clock is ticking on fall fertilizer decisions. A trio of factors—a wet spring, yields on pace to set all-time records and low corn prices—place a premium on making tough choices for 2015 crops even before this year’s harvest. The good news is fall and spring fertilizer prices will be about the same as this past year, says Gary Schnitkey, University of Illinois ag economist. Lower prices are even possible for some nutrients.

This year, everything went right for corn production. Record yields mean big-league fertilizer uptake, especially nitrogen, which has been on reserve in the soil. 

"We don’t expect more-than-normal nitrogen carryover," says Emerson Nafziger, University of Illinois agronomist, which means normal rates will probably be sufficient for 2015.

With an increase in soybean acres this year, farmers will likely rotate to corn. Since corn following soybeans typically requires less nitrogen, the potential exists for somewhat lower rates, Nafziger adds. 

Urea use on the rise. "When it comes to a nitrogen source, more slow release urea products and urea’s price competitiveness compared with ammonia have shifted the advantage to urea," says Alan Goldsby, urea product manager for CHS. More farmers are also splitting fall and spring applications and putting on more nitrogen closer to when the plant needs it, he adds. 

Although a spring nitrogen application makes sense for plant needs, it adds one more operation in an already tight planting window, Nafziger cautions.  A wet spring only exasperates the situation. 

In contrast to nitrogen, phosphorus and potassium application strategies suggest a reassessment with $3-something corn, experts say. Most fields have ample supplies, which means application levels can be cut back, Nafziger says. Unlike nitrogen, phosphorus and potassium are stable nutrients, so heavy rainfall in spring 2014 did not move the nutrients too far from plant roots. 

Don’t get caught in the trap of cutting back too much on phosphorus and potassium then have to make up for lost ground when volatile prices once again find the top, he adds. Phosphorus and potassium prices are no higher than a year ago. 

"There is supply risk and price risk for farmers," Goldsby explains. This past spring was a lesson in both, as unexpected demand and logistical problems of rail service and late river openings forced fertilizer prices considerably higher. The price spike happened during a period when many experts forecasted lower prices. Had it not been for a late spring in the northern Plains, some producers would have been forced to delay fertilizer application, disrupting normal practices, Goldsby notes.

Longer term, the growth in nitrogen production and new plants suggests supply outpacing demand as early as two years from now. According to David Asbridge, president of NPK Fertilizer Advisory Service, 21 plants have been proposed. Of those, five are expansions/debottlenecks of existing plants. As for the others, he expects only five to be built. One is under construction in Louisiana, two in Iowa and one probable plant in Arkansas. His skepticism is based on economics—$700 urea spurs expansion more than $400—and the tough approval process for water and air.