fertilizer prices — an upside down market
Agriculture’s F astest
by barry Ward, leader, produCTion crop? Better prospects for profitability for
business manaGemenT for oHio sTaTe 2009 and 2010 in the form of higher com-
Growing b rand
uniVersiTy exTension, deparTmenT of modity prices (if they occur) may move
aGriCulTural, enVironmenTal and some producers back into the market for
deVelopmenT eConomiCs purchasing not only needed N for corn
4 T O 18 ROW • RIGID AND FOLDING
Fertilizer purchases and prices locked in production, but P and K that they may
by retailers (and many producers) at high have skimped on thus far for 2009 crops.
prices from mid-spring through mid-fall Based on differing sets of fundamentals,
looked to be good decisions as prices for a case for higher and lower fertilizer can be
• Pr oven knife roll • Unique stalk mulching
fertilizer were projected to increase into made for the coming months. So, what
technology technology 2009. Instead, the global financial crisis fundamentals will drive fertilizer markets
• Exceptionally changed much of the outlook for commodi- in the next year?
competitive price
• Lowest hors epower draw
ties including crops, energy and fertilizer.
Lower commodity crop prices and
The case for higher fertilizer prices
poorer prospects for profitability in 2009
1. If we experience steady to higher
BOTH M ODELS OFFER
kept many producers out of the fertilizer
commodity crop prices and reasonable sce-
buying market. Producers, aware of falling
narios for profitability, fertilizer purchasing
‡7KHLQGXVWU\·VIDVWHVWÀHOGWUDYHOVSHHGV   fertilizer demand (domestic and global)
will resume, which may put some upward
• Industry leading yield r etention
and import/wholesale prices, were hesi-
pressure on fertilizer prices again.
2. Balance sheets for farmers in the
• Tremendous resale value
tant to buy high-priced fertilizer when
lower prices might potentially show up at
United States are generally strong, espe-
• Unpr ecedented factory support
the retail level.
cially amongst crop farmers. Strong finan-
• Reliable & lightweig ht aluminum gearboxes
Throughout this past fall and winter,
cial positions will “help grease the pur-
retailers have struggled to find buyers, and
chasing wheels.”
producers have struggled with the decision
3. Large under-fertilized acreages
of when to purchase needed fertilizer.
worldwide signal stronger long-term
Retail ag dealerships have struggled with
fertilizer demand.
when, and by how much, prices could or
4. Fertilizer manufacturing/mining cur-
should be lowered to encourage farmer
tailments over the past several months as a
purchases while limiting their own losses.
result of slow demand may over-compen-
Prices have declined for some fertilizer
sate and see supplies unable to keep up
materials while others have remained at
with demand when producers return to
relatively high levels.
the market.
Fertilizer prices (with the exception of
The case for lower prices
potash) have declined sharply in the past
six months. According to our retail survey
1. Large high-priced inventories com-
that we conduct by surveying several crop
bined with smaller farmer purchases at the
supply outlets in Ohio, the price of NH3
retail level continue to put downward
on March 22 averaged $765 per ton. This is
pressure on prices.
a decrease of 37% from six months ago
2. The potential for lower commodity
prices (due to falling demand from the
7 01-852-1876 • www .geringhoff.com On The Cuttin g Edge ($1,212 per ton), but down only 6% from a
year ago ($783 per ton). UAN, now priced
global downturn) and questionable prof-
at $331 per ton, is down 33% from six
itability in 2009 may keep many produc-
months ago, from a high of $492 per ton.
ers from fertilizing at high, or even
Apple Farm Service
Urea decreased 43% in the last six months,
sufficient, levels.
falling from $870 to $498 per ton.
3. Deteriorating credit opportunities in
According to our survey, MAP price
many countries around the world may
Botkins/Covington
declined from $1,223 to $683 per ton in the
hurt demand further.
past six months, while DAP price fell from
4. Lasting demand destruction may
937-526-4851
$1,218 to $700 per ton. These are decreases
occur in some countries/regions due to
lack of liquidity or financing and/or uti-
Agri Trac Equipment
of 44% and 43%, respectively.
As of March 22, the price of potash has
lization of alternative nutrient sources.
not followed this trend. According to our
5. A stronger U.S. dollar allows for more
survey, the average price of potash is $880
purchasing power in the United States and
Utica
per ton. This is up 1.8% from six months
lower prices for imported fertilizer.
ago when it was averaging $864 per ton.
6. Lower transportation costs due to
740-892-2831
Additional fertilizer prices as of March
lower energy prices and less demand for
Polen Implement Inc.
22, 2009, were:
transportation worldwide will decrease
NH3 — $765 per ton or 47 cents
prices for imported fertilizer.
per pound;
There have been, and will continue to
Elyria
UAN — $331 per ton or 59 cents
be, painful adjustments as farmers, retail
per pound;
dealers and wholesalers sort out how to
440-322-8821
UAN direct to farm — $298 per ton or
navigate the present uncertainties in the
fertilizer markets. Eventually, higher-priced
Burkhart Farm Center
53 cents per pound;
Urea — $498 per ton or 54 cents
inventories will be sold through retailers
per pound;
and the cycle will begin again.
MAP — $683 per ton or 66 cents
Will all retail crop service companies
Bucyrus
per pound;
survive this upside down fertilizer market?
DAP — $700 per ton or 67 cents
If there is some industry consolidation, will
419-985-2141
per pound;
producers suffer due to lack of local retail
The Equipment Superstore
Potash — $880 per ton or 73 cents
fertilizer dealers? And what will that mean
per pound;
to competition and price of retail fertilizer
10-34-0 — $1,038 per ton;
in the long run? Will producers find prof-
Georgetown/Wilmington
On-Highway Diesel (Midwest) —
itability in 2009 even with these relatively
$2.04 per gallon
lower fertilizer prices? There are many
877-FARMPARTS
Eventually, producers will have to
questions, but not enough evidence yet to
return to purchasing fertilizer and not (in
draw conclusions. Most experts agree that
some cases) rely on existing P and K levels
in these volatile times, spreading out fertil-
in the soil. Will that be yet this spring or
izer purchases to take advantage of some
24Crops •
later this fall in preparation for the 2010
cost averaging may be prudent.
Ohio’s Country Journal • May 2009
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