The fertilizer price situation

Fertilizer prices are steady to lower at this point in 2013. At this point in time it looks like crop producers may get a break on their fertilizer costs for 2013. At the end of January, prices for potash and phosphate are down compared to year ago levels but nitrogen prices are a little higher. According to the DTN survey of retailers, prices for DAP are down 5.5 percent from a year ago and potash prices are 9.5 percent lower. Prices for nitrogen are up compared to last January (Urea is 2.5 percent higher while anhydrous is up nearly 9 percent), but prices for urea are lower now than they were last spring.

The fertilizer price situationSupply and demand may boost prices this spring. There is the possibility that prices will increase by spring. Demand is expected to be strong with corn acreage staying high, and maybe even increasing compared to 2012. But getting the fertilizer in to where it is needed may be difficult if the flow in the Mississippi River doesn't increase. A lot of the fertilizer farmers use is imported through the Gulf ports and barged up the river. Barge traffic has been slowed, and even stopped recently, because of the low water levels, which are the result of the drought.

Application rates may be down due to low yields last year. The low yields in 2012 may have an impact on fertilizer demand in 2013. In some cases the drought probably reduced the amount of P and K removed from the soil by the plants. This is not expected to be a big factor for total fertilizer demand, but it could marginally reduce overall application rates for 2013. Inour online survey 16 percent of respondents said they reduced fall fertilizer application rates due to higher than normal nutrient carryover.

Crop acreages may be higher than they were in 2012. The next key question affecting fertilizer use will be the crop acreage mix. USDA will conduct a survey of planting intentions in early March and report the results at the end of March. We will survey our subscribers to Doane's Agricultural Report ahead of the USDA report. We currently expect corn acreage to be nearly unchanged from 2012 levels, soybean and wheat acreage to be up. There is more land available for crops in 2013 due to a 2.5 million acre reduction in the size of the Conservation Reserve Program at the end of September.


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