Natural Gas Trending Down

August 16, 2012 11:31 AM
 

 

Natural gas prices are the lowest they have been in years. This is good news for farmers with an eye toward saving on fertilizer costs. Natural gas prices correlate -- to some degree -- with the prices of Anhydrous and Nitrogen as these are by-products of the refining process.

Because of innovations in extraction techniques over the last few years, shale gas is less expensive and much easier to access. This has led to a surplus. Inventories here in the US are up 17% over this time last year. In addition, natural gas is difficult and impractical to transport overseas, contributing to a robust domestic supply.

As natural gas prices decline, prices of some fertilizers have followed. But this summer's drought will also figure heavily into fertilizer prices in the coming months. High corn prices often have a dictatorial relationship over the price of inputs, but low natural gas prices are quick to soften the blow.

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