Have Fertilizer Prices Peaked? Here's What's Signaling Possible Stability and Relief

Have record high fertilizer prices finally peaked? While prices continue to remain high right now, there were some signs last week and into Monday that indicate some relief and stability may be in sight.

The prices for physical urea at the port of New Orleans eased some last week, according to Josh Linville, director of fertilizer for StoneX Group. Linville says there has been over $250 worth of movement in the market since just before Christmas.

And while prices continue to rise for many fertilizers, they aren't climbing as dramatically as they were just a couple of weeks ago. And Linville had more good news Monday. 

I'm trying to keep sharing good news for #urea.

Nov import numbers came in MUCH higher than expected which will add weight to the market.

Still need to import a lot for spring but this takes a lot of edge off the market. Cannot disconnect from global but should stay discount. — Josh Linville (@JLinvilleFert) January 10, 2022

"I'm trying to keep sharing good news for urea," Linville tweeted. "Nov import numbers came in MUCH higher than expected which will add weight to the market. Still need to import a lot for spring but this takes a lot of edge off the market. Cannot disconnect from global but should stay discount."

"Phosphates were the quickest to add gains because of some of the legal stuff that was going on that gave everybody the creeps, basically," says Davis Michaelson of Pro Farmer. "But now, I think urea is the one to watch because it is publicly traded."

He says just as markets and traders typically work, the market is fueled by a lot of emotion

"And so we have a scare in the urea markets right now. So, they're buying high and selling low and it's it's moving and shaking all over the place," Michaelson adds. "I feel like the best thing that we can hope for is some stability in these fertilizer markets so farmers can at least get their budget penciled in and know what their costs are, know what they're gonna have price wise for their crops, and they can move forward from that."

Also possibly helping prices is the fact early last week, European natural gas prices were half of what they were at the most recent market high.

On AgriTalk last week, Linville says while it was a positive development, it's just one of the many necessary steps needed to cut fertilizer prices.

"Is that going to continue? What if all these inputs of supplies of natural gas stop? What if it gets cold and the price goes back to 40 or 50? So, they have to make a decision. It's got to be more of a long-term decision. So this is a good step forward, but it isn't the nail in the coffin for high prices," says Linville.

Natural gas prices shifted quickly in Europe last week, with concerns about cold weather, low inventories and the possibility of Russia tightening supplies.