From the Farm: Buy fertilizer now or later?

Agriculture

CENTRAL ILLINOIS (WCIA) – There is a lot of anxiety in the farm community over current fertilizer prices, which have more than doubled this fall. Farmers are unsure of whether to buy it now or wait until spring in hopes that the price drops back down.

Josh Linville, director of the fertilizer department for Stone-X Group, talked to the Illinois Corn Growers about fertilizer issues.

“As I’m reading the tea leaves today and everybody’s got to understand, this could change in a moment,” Linville said. “As we look at it today, unfortunately, nitrogen, phosphate, potash prices all look like they are going to stay high through the wintertime and go higher next spring.”

One of the chief executives of an agribusiness said there is plenty of fertilizer. It is just what the companies decide they want to make off it?

“Yes and no,” Linville answered. “So a producer is going to sit there and sell it at what they see the market at. And what a lot of people don’t understand, take urea for example. It’s one of the largest produced products around the world. We are a net importer, the US imports something like 5, 5.2 million tons every year. So we are part of the world market and the same thing goes for phosphate.”

“We don’t need to import all of that, but if we get too cheap versus the world, now we have to start running the risk that we are going to start exporting that product to other places. We can start exporting it to India and Australia and different places like that,” Linville continued. “So while we may not be as high as the rest of the world, we do need to stay connected or else we start losing product to the rest of the these global demand points and all of sudden, our price gets taken up that way.

Linville said if you are going to book your fertilizer, also book your crop at the elevator.

“If you are going to lock something in today, let’s say you’ve decided ‘I’m going to plant corn next year, and I am going to buy the fertilizer, I am going to buy the seed, I am going to buy the chemical,’ consider selling forward. Sell that December 22,” Linville said. “As bad as it is today, to buy the fertilizer as sky high as it is, and look at where Dec 22 corn has been, that’s bad. But what is significantly, significantly worse, if we buy that fertilizer, if we buy that seed, if we buy that chemical at the crazy high prices as they are, and we drag our feet and all of a sudden, say China demand goes down or our yields are significantly higher this fall that what we expected or the crazy things like Washington trying to do away with the ethanol mandate, there are still black swan events that can make corn prices absolutely crater and I guarantee that is going to be a lot worse than where we sit today.”

You can hear more from Linville on Midwest Ag This Week, our weekend farm show on Saturdays.

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