With farm income projected to fall this year, here’s what to watch for the fertilizer, seed and crop protection price outlook.
Fertilizer
Samuel Taylor, senior analyst for farm inputs at Rabobank, shares the year over year change in the company’s fertilizer affordability index has been dramatic.
“At the peak of the Russa/Ukraine crisis, we saw the affordability of fertilizers moved to some of the least affordability since 2008,” he says. “Since then, we’ve seen adjustment. There’s a bit more clarity and more reestablishment of supply chains.”
With that adjustment, Taylor shares the fertilizer affordability index reached one of the most affordable levels in several decades and has now moderated to a more normalized level with wholesale prices still lower than the previous couple of years in the North American market.
“On a year-over-year basis, ammonia is down 50%, phosphates are down a little less than that, but they’re still down in the low teens, and potash prices are down 44% year-over-year,” he says.
Looking ahead, Taylor is anticipating a 4-5% increase in fertilizer demand volume in the 2024 season. He also shares that so far, potash and phosphate production in Israel is functioning as normal. However, if disruptions spread, there could be logistical manufacturing issues to watch for.
Crop Protection Products
Like fertilizer, wholesale prices for agrichemicals are coming down.
Taylor reports the indexes compiled by Rabobank for herbicides, fungicides and insecticides are all showing more affordability:
- Herbicide Index: Down ~50% year-over-year
- Fungicide Index: Down ~40% year-over-year
- Insecticide Index: Down ~25% year-over-year
Seed
One of the input costs that won’t be providing growers with much relief is the price of seed.
“Seed pricing seems to be caught in the vortex of slightly higher cost of production,” Taylor says.
Wholesale soybean seed is expected to be priced more competitively, with a year-over-year change of near 1%. Corn seed prices, however, are up around 5% this year.
FarmDocDaily from the University of Illinois reports seed costs are projected to reach a record $126 per acre in Illinois for both the 2023 and 2024 crop years.
Though in terms of overall revenue, they are projecting the seed cost share of crop revenues at 11% in 2023 and 12% in 2024 – which is near the average of 11% from 2000 to 2022.
Overall 2024 Outlook
“Across the board, growers are going to be looking at some of their direct costs of production and looking at them at a much more favorable level,” Taylor says. “From a margin standpoint, it’s probably a lot more favorable for soybean production.”
