Utterback: Make Your Fertilizer Game Plan

March 4, 2009 06:00 PM

Greg Vincent, Top Producer Editor

Farmers who bought fertilizer last summer and fall may act like a kicked puppy when it comes time to price product ahead for 2010 and beyond. But with wholesale fertilizer prices on the decline, it's time to get over it and bite back, says Farm Journal Economist Bob Utterback.

"My feeling is very strong that we're putting a low in this crude oil market in the $35 to $40/barrel level,” he says. "The bottom will arrive in midsummer and we'll start an upward thrust in crude oil, contingent on how fast global economies recover.”

With an expected decrease in corn acreage this year, it's possible acres could rebound in 2010, putting strain on fertilizer supplies, he says. Fertilizer producers can increase profits with lower volume, he says, so there is little incentive to keep production up. He assumes fertilizer demand in China will remain strong, particularly for potash and phosphate.

With tighter margins, Utterback says, "You have to start integrating crop insurance, options and futures into an organized plan so you know how you're going to operate six months to a year out if a price event does come to you.”
Listen in as Farm Journal Economist Bob Utterback provides insight to the volatile fertilizer industry.
For more of Bob's comments, visit his Outlook Today blog.

You can e-mail Greg Vincent at gvincent@farmjournal.com.

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