Rabobank: Ample Supplies Will Restrain Fertilizer Prices

Rabobank: Ample Supplies Will Restrain Fertilizer Prices

When it comes to fertilizer costs, agricultural lender Rabobank seems to think that farmers can expect more of the same in 2015.

“Overall, the situation in 2014 appears similar to last year,” according to Rabobank’s quarterly fertilizer report, which was released this week. “With moderately bearish sentiment in [the first quarter of 2015], standard price support will originate from spring buying as stocks deplete.

The bearish outlook is a result of ample supplies, which are likely to limit the price growth for urea, ammonia, potash, and phosphates.  Another factor in Rabobank’s forecast? The potential for tax policy changes in China, which could increase that country’s exports of urea and potash.

“China is set once again to make major changes to its export tariff scheme in phosphates and urea,” noted the report, which it said “could have a major impact on the availability and pricing of urea.”  In terms of potash, China is both expanding its potash operations and building up its stocks. That gives the country some “pricing power,” according to Rabobank, but only a limited amount. “Reduced global demand and relatively high inventories will limit upside in potash ahead of the major 2015 contract negotiations in China, despite supply management from producers and a flooding incident at one of the mines.”

Back in the U.S., relatively low crop prices, late harvest, and cold weather are affecting fertilizer use. “At the end of November, 40 percent to 50 percent of the typical fall ammonia applications in the Midwest had not yet occurred,” the report said. “Overall, we expect a relative reduction in fertilizer demand  due to carry-over stocks, lower corn acres, and more prudent application.”

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Spell Check

Bradley Paumen
Maple Lake, MN
12/24/2014 07:19 PM

  None of the input providers want to take a discount, everybody thinks that soybeans are going to increase acres, but bushels x price is a loser for both, on our farm it is easier to raise 180 bu. corn then 50 bushel beans, so if you do the math, both suck, just one more than the other. If you use below average yields and current price pretty ugly, low fertility gaurantee low yields, while high fertility only gives ability for high yields, tough for everyone right now, except the fertilizer, seed companies.

nebraska city, NE
12/24/2014 11:38 AM

  Its simple, they charge this much because they know farmers are going to use it. No more complicated than that. Farming has now ranged into the realm of fantasy land where no one on the input sides cares that the products they are producing are not economically viable to use because the farmers still line up to be fleeced. Don't expect prices to fall on anything because they don't have to. This push for higher and higher yields as the answer is an insane marketing gimmick. If a market is flooded with a product one does not solve this problem by flooding the market deeper. If an average yield increase of about 20 bushels per acre drops our price into the $3 range for corn just image if we can bump our production another 50 bushels, $1 corn, oh yeah baby lets shoot for that one. And all that takes is a huge pile of fertilizer at extraordinary profit levels for the Koch company and $350 dollar a bag corn for the seed companies. Just brilliant. But every farmer I know sings the same brainwashed song "gotta increase the yields hurr durr". No, no you don't. Want to be profitable, then lets all raise 100 bpa corn. Half the fertilizer, $125 a bag seed, $8 corn at market. Seems like a no brainer which unfortunately will never happen.

Chappell, NE
12/24/2014 08:39 AM

  Ample supplies and stupidly high prices might go hand in hand?


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