2010: The year of the fertilizer bargain?
It's been a while since global fertilizer prices started sliding from record highs, but the beginning of the new year could usher in some good fertilizer buys for farmers.
The world market's dipped but returned from its lowest point. Still, prices are well below the highs from a little over a year ago, when prices for urea, phosphate and potash were all hovering at or near record levels. That means there could be some good buys out there.
"Fertilizer prices for the 2010 season should be a bargain compared to past years but you will need to comparison shop," says University of Nebraska Extension soils specialist Gary Hergert.
Take nitrogen, for example. With urea prices at their lowest levels since 2006 and high ammonia inventories in the Corn Belt right now, it's not a bad time to nail down supply for the coming year before a current glut of inventory is spoken for and demand picks back up.
"World urea prices declined significantly since 2008 and were back to 2006 levels this summer. Prices rebounded somewhat recently and are showing some strengthening, but are still well below highs seen last year," Hergert says of urea, which currently ranges from $400 to $470 per ton in western Nebraska, for example. "The best nitrogen buy is ammonia. With the late corn harvest, there was little fall application through most of the Corn Belt and this has created high inventories. Ammonia FOB the Corn Belt is now running just over $350/ton with dealers asking $400/ton.
"World demand for fertilizer is still recovering," Hergert adds. "The Chinese had nitrogen export tariffs but are expected to lower these. The Russians have opened a new facility to load super tankers with ammonia which provides competition for world markets."
After huge jumps in the last 2 years, phosphorous and potash prices have, like nitrogen, sunk back to 2006 levels. That's after prices almost quadrupled for 18-46-0 DAP, which is now running around $330 per ton in the Corn Belt, Hergert says.
Potash prices have fallen by half from last summer to around $400 per ton and have "recently taken another small drop," Hergert says. This market's a little different than phosphorous and nitrogen, though, mainly due to geographic factors.
"In the western hemisphere, potash prices are effectively controlled by the Canadians who have much of the world supply," Hergert adds. "They have the advantage over the Russians and Europeans because they have lower transportation costs to get it to the U.S. Potash prices took much longer to decline than nitrogen and phosphorus."
In general, fertilizer is the crop input where most farmers say they can trim cost for the coming crop year. In a recent Agriculture.com poll, 47% responding said fertilizer represents the biggest potential money-saver.
"For my farm, the biggest expense is fertilizer, so when the price drops in half, that's a lot of savings," says Agriculture.com Farm Business Talk member Whitesand Farms. "Fall-applied NH3 last year was 85 cents a pound with applicator and delivered, and this year it is 35 cents a pound on 100 tons of NH3. That's a big difference."