It looks like the fertilizer market is becoming more volatile again heading toward fall and winter. Gary Schnitkey, University of Illinois Extension farm management specialist, reported in mid-September that prices for fall fertilizer this year were up. How high they could get is not completely known.



Schnitkey said anhydrous ammonia prices during the summer averaged about $548 per ton. Schnitkey told the Illinois Farm Bureau Profitability Advisory Team that anhydrous ammonia prices could average between $600 and $650 per ton this fall.



As of Sept. 16, the average price was $602.64, according to the USDA Illinois Department of Agriculture Market News. Offers ranged as high as $632. According to the same report, other prices were going up, too.



On top of higher prices, some retailers reported that fall fertilizer supplies would be tight. Some even said if farmers had not booked their fall fertilizer by the end of August, they might not find supply available if they wanted to make a fall application.



Although natural gas prices have remained relatively cheap, the rise in fertilizer prices is being fueled by competition with other countries, namely China and India, as they ramp up production in their own countries. In addition to global competition putting pressure on prices, U.S. farmers are expected to increase acreage for corn and wheat next year, increasing national demand for fertilizers, which in turn will tighten supplies and increase demand.



Another challenge that will impact retailers and farmers this fall has been the success of the corn crop. Unlike last year, the crop has dried down quicker and earlier. This has sped up harvest across the Corn Belt with many farmers expected to be finished significantly earlier than last year. As a result, many farmers, who felt stung by last year’s late harvest and who had to leave corn in the field after snow came early, may want to get their fall fertilizer application on early as well.



However, the Illinois Farm Bureau is urging retailers to remind growers of the conditions under which the nitrogen needs to be applied. Retailers are likely to get pressure to apply early this year. However, tight supplies and higher prices may mitigate this effect. But retailers will need to remain vigilant.



Another unknown facing retailers is grower reaction to increased fertilizer prices in light of higher commodity prices this fall. On Sept. 17, commodity prices for corn pushed above $5 per bushel, which was the first time prices reached that level in two years. Trends in the futures markets suggest corn prices will remain above $5 well into 2011.



When corn shot past $7 per bushel in 2008, fertilizer prices also rose significantly, causing many farmers to forgo their fall application in order to save money. That dramatic drop in demand subsequently impacted the fertilizer manufacturers that serve the U.S. market. Eventually, corn prices and fertilizer prices dropped significantly.



Will farmers rebel this year? It is unclear. Perhaps the market will take care of itself by keeping farmers out if supplies are tight.



Once again, this scenario shows how important the retailer is in helping farmers plan their fertilizer purchases early to save money and to lock in supply. Their expertise and service remains second to none.



As the global markets have an increasing impact on U.S. fertilizer supply and demand, retailers will be critical in helping farmers navigate the markets.