Purdue Extension -- Steady to Bullish Outlook

February 11, 2013 06:13 AM
 

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A report from the Purdue Extension Office expects the cost of crop production to remain largely steady over last year. The report finds that, while some individual nutrients are expected to increase, price declines in other nutrients should even out the gains.

Urea, NH3 and UAN are all expected to increase over last year by roughly 2-5%. Phosphates are down nearly 4% from January 2012, but are expected to climb by 1-3% year-over by spring -- eliminating declines. Potash prices are down dramatically as international sendouts stalled late in 2012. But that international pause was just enough to create a price-busting backlog in Canada's warehouse. That inventory is expected to keep K stable where it is currently at 8% below year-over.

"Ammonium phosphate products account for a large part of the phosphate fertilizer market in the U.S.," Purdue Extension Expert Alan Miller said. "Phosphate prices are expected to increase 1-3 percent into the spring of 2013 as suppliers rebuild inventories, and due to the influence of nitrogen in phosphate products."

Meanwhile, Miller projects LP to fetch a premium in the short-term adding up to 10% from the fall of 2012. That puts LP in the neighborhood of $1.60 per gallon this spring -- which is still less than 2011 pricing. Remarks like this often have growers wondering when the cheap natural gas we keep hearing about will soften pricing and it is true that the U.S. has a glut of nattie in storage and North Dakota crude operations still burn more in-field nattie than they collect. Once infrastructure -- pipelines and transport -- has caught up with the natural gas production boom, prices will show some genuine easing. Until then, our supply is limited by refinery capacity and transport issues.

At the same time, diesel fuel is projected to fall 2-3% from the same time last year. Miller remarks, "The state of the global economy and higher domestic oil and gas production are factors driving the forecast for diesel fuel prices."

So while K falls on strong Canadian supply, Phosphates and Nitrogen are both expected to draft at least a little higher by spring on high ammonia and transport difficulties -- be they on the trickling Mississippi River or on trains that are not especially thrilled to haul ammonia.

Either way, Purdue Expert Alan Miller expects inputs pricing to even out to match last year's pricing pretty closely. That being the case, my argument is strengthened that one would do well to check your local pricing for N&P now and consider filling a portion of spring N&P.

Click here for the Purdue article...


 

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