Higher farmer incomes could spur fertilizer sales

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Although this summer’s drought and heat have caused fertilizer demand to slump, new data suggests that farmers’ incomes are expected to rise and therefore are fertilizer sales.

As harvest is underway, many farmers have seemed reluctant to begin any new fertilizer purchases, instead choosing to wait closer to application time. However, new data released by the U.S. Department of Agriculture forecasts farmer net cash income will increase to nearly $140 billion in 2012, up from $134.7 billion in 2011. The higher income is due to the higher commodity prices due to the drought this summer.

Market analysts are now beginning to project that despite the crop losses this summer, a renewed sense of confidence is emerging that farmers will be able to recover their losses through insurance policies. If that is the case, fertilizer demand could perk back up this fall.

Several fertilizer manufacturers in recent weeks have each stated they forecast improving demand for fertilizer this fall and into next spring since farmers will want to plant more acreage to corn next year after this year’s corn crop was so severely damaged. These companies have included CF Industries, Mosaic, and PotashCorp.


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