By Michelle Rook and Clinton Griffiths
A warm winter in Europe and easing supply chain issues have led to a 50% drop in natural gas prices since last November. As a result, nitrogen fertilizer products have followed suit.
“At the start of 2023 the fertilizer markets feel to a certain extent oversupplied, and nobody is worried about logistics,” says Josh Linville, vice president of fertilizer with StoneX. “It is a much calmer marketplace today than 12 months ago.”
Many fertilizer product prices are down significantly from last spring.
“In the past six months we’ve seen a 30% to 20% reduction in prices of potash and phosphates, respectively,” says Sam Taylor, farm inputs analyst at Rabo AgriFinance. “I think the narrative is you could see further downward pressure on price.”
The current market, Linville adds, means farmers should be proactive: “It is not typical for fertilizers to be bearish going into spring. It slows the supply chain as no one wants to take on the risk. Be talking to your retailer about your spring needs so a plan can be put together.”
ON-FARM STORAGE
The incredible input price volatility of the past three years encouraged Sterling, Kan., farmer Matt Splitter to in-vest in on-farm storage of many inputs, specifically liquid fertilizer. A no-till producer, he favors liquid over dry fertilizer or anhydrous, and has storage capacity for just under half of his annual liquid needs.
“When we get all our systems going, we want to be at maximum efficiency,” he says. “We don’t have time to run to town to get a semi-load or wait for delivery. Efficiency means ownership of inputs.”
Standard fertilizer tank options include polyethylene, fiberglass and stainless steel. The choice usually comes down to price. Poly tanks can last up to 20 years, fiberglass 30 and stainless in excess of 50. Every state will have different rules about safety and diking requirements, says Brad Peas, co-owner of Agro-Chem.
“Overwintering UAN-28 is a better option than UAN-32 because of its freezing point,” he says. “Buying a smaller tank for micronutrient storage is also becoming popular.”
BUYING GROUPS
For farmers who might not be ready to pull the investment trigger, another solution can be a bulk buying group, says Jim Hedrick, general manager of Sagamore Ag Source. He says his customers can see $30 to $40 per acre savings on major inputs.
“Traditionally, buying groups assembled purchasing power, and people had to commit their buying needs to the group,” Hedrick says. “Our group pays an annual fee, but they don’t have to buy anything.”
A buying group provides preferential access to a collection of farmers or acres. Simplifying a big sale is often incentive enough for large companies to make some price concessions, Hedrick says.
