Prepare now for higher fertilizer costs
A natural disaster and disruptions in trade and logistics are creating volatile fertilizer supplies and prices.
“Through the end of 2020 and all of 2021, a perfect series of black swan events have driven fertilizer prices, and it doesn’t seem to be letting up anytime soon,” says Josh Linville, director of fertilizer for StoneX.
Following Hurricane Ida, CF Industries put out a force majeure letter for its Donaldsonville, La., facility, saying there would be product disruptions. CF Industries has 19 plants at the facility, which includes six ammonia and five urea producing plants.
“Our view for the rest of 2021 is the world trade flows are tight on phosphate and urea and most every fertilizer out there,” Linville says.
MAKE SMART CUTS
For now, plan for fertilizer prices to be up 15% to 20% next year versus 2021, says Michael Langemeier,
Purdue University ag economist.
“I say this every year, but it’s very important as prices are increasing,” he says. “Look at each major cost item and say, ‘Are there any changes I can make to mitigate the increases?’”
Today’s high corn prices are coupled with high fertilizer prices. These ratio charts show how many bushels of corn it takes to pay for one ton of urea and potash.“The prices don’t matter as much as the relationship,” says Josh Linville with StoneX. “Farmers try to keep as many bushels back as possible.”
