Fertilizer Price Outlook
January 15, 2003
Will nitrogen prices be stable, or will they rise to the levels of a couple winters ago?
"Its hard to tell for certain, but there are substantial differences between recent price increases and last year," says David Franzen, North Dakota State University extension soil scientist.
In the fall of 2000, the weather was horrible, with wet fields in the Red River Valley and elsewhere that allowed the application of only a small amount of fertilizer, Franzen says.
This fall, although it has been cold, the weather generally has allowed application of fertilizers where farmers elected to do so. This means that there probably wont be the huge surge in demand for anhydrous in the spring as there was two years ago.
In 2000-2003 the supply industry was not as prepared as they are now to handle the large amounts of imported nitrogen required to supply the United States.
"Although natural gas prices have risen in North America, they are still cheap, and will remain so in Russia, Venezuela, the Middle East and other producing countries. These countries produce ammonia and ammonia-derived fertilizers. Higher prices here mean higher profits for them."
Timing makes a lot of difference, "Whereas in 2000-2001 there was only a couple of months to bring badly needed fertilizers into the country before spring planting in the southeastern U.S., and three to four months for the rest of the country, there is almost six months to lay in cheaper products for the Northern Plains before next spring," he explains.
"What I think this means is that although ammonia prices may increase over last springs prices, the increases will not be as severe as they were in 2000-2001. It also means that urea will stay reasonable priced compared to ammonia. It is more easily imported and transported than ammonia, and at a cheaper price. We didnt have a shortage in 2001, and I dont anticipate one in 2003."
But a war with Iraq and the reaction of gas producing countries are "wild cards" in the outlook, he says.