The nitrogen outlook faces some major hurdles in the coming months, and the only certainty at this point, is that growers will need it for spring. Currently, farm production percentage data suggests there is room to the upside for nitrogen, and N pricing could make a run at a greater percentage of farm expenditures.
The University of Illinois recalls anhydrous pricing in August 2008 reaching $1,151/tonne only to fall hard over the following year, fetching just $428/tonne one year later. N has demonstrated volatility as corn prices created an upward vacuum that had nutrient pricing dramatically overshooting corn's 2008 contract high -- slingshot...engage.
Inputs are acting much the same in 2012 as they did back in 2008, but today presents a more reserved run to the upside. As input pricing moderates under stress, trends suggest just how dramatically inputs overshot corn's 2008 spike, and point toward a pricing structure that has taken a deep breath and collected itself.
There is room to the upside for nitrogen and it may yet visit the high end of pricing expectations. The trick to keeping nitrogen pricing from forcing growers to skimp on P&K will be getting fresh inventory downstream inexpensively.