The fertilizer industry is looking at the flooding in the Midwest and South and analyzing how it might affect fertilizer sales.
As much as 1 percent of U.S. farmland might not be planted this year because of devastating floods, suggested CEO Bill Doyle of Potash Corp in an interview for distribution Thursday to employees and customers. He added that this will have a limited effect on sales for the world’s biggest fertilizer supplier.
Addressing the company’s yearly shareholders meeting, he also said that although this amounts to around three million acres of the U.S. farmland used for food and feed production, it would not pose too big a threat to increasingly tight 2011 world food supplies. But then he turned around and suggested for the world’s sake, U.S. farmers will hopefully have excellent crop production.
He detailed that the world has used more grain than it has grown for seven years out of the past 11 years and that farmers need a “terrific” crop this year to meet demand. “We really need to have record, strong crops to help the situation,” Doyle said.
“You can plant 35 percent of the corn crop in the U.S. in one week,” Doyle pointed out, which means that if flood waters recede rapidly, land will dry quick enough to be planted in corn and not even have to be switched to beans or another crop.
Because a lot of potash goes on in the fall, total demand for the calendar year is not expected to decrease for 2011. “In 2011, we anticipate demand will be in the range of 55 million to 60 million tons—pushing the potash industry close to its production limit,” Doyle said.
As for ag retailer sales of fertilizer, flooding will mainly only affect those retail operations next to the flood waters and flooded fields. Nitrogen application will be the most worrisome problem for corn production on previously flooded ground.
The Mississippi flooding is also disrupting fertilizer barge traffic for in-season delivery of such product as urea. How much this transport disruption is limiting competitive product supply and pricing has yet to be addressed by the fertilizer industry. If train transport is the only method of delivery as in-season resupply is needed, it would logically encourage higher pricing—supply and demand.