From the Farm: Fertilizer Dynamics

Agriculture

CENTRAL ILLINOIS (WCIA) – Prices for farm fertilizers are exploding upward, but there is a different reason for each one. National politics in different countries are threatening U.S. crop yields next year.

Josh Linville of StoneX – formerly FC Stone – may be the most quoted authority today about fertilizer prices, and his advice is to book it now if you can.

“Unfortunately, each one, nitrogen, phosphate, potash, all three of them have their own worst-case scenarios on the upside,” Linville said. “Nitrogen, when you look around the world, China has shut down exports, European natural gas continues to remain sky high, which means their production is way down. Russian output caps are put in place, Egypt is doing the same thing. If demand continues to come in Q1 as we expect it to, there is still plenty of upside, not to mention the U.S. This is going to sound weird, but we are actually cheap versus the rest of the world now. So once we start to move in line to call in those imports, we could see our prices go up significantly.”

“Phosphate, we are chewing through our inventories right now,” Linville continued. “Bangladesh actually just finished a purchase tender. Their lowest price offered: $975 a ton. China is the first or second exporter in terms of volume on phosphate and they’ve shut that down through June. Other places are still very, very low. There’s been all sorts of reports and stories coming out of India about how low their stockpiles are compared to normal.  We are in a very low inventory, high demand period. And prices are starting to reflect that. We are not going to be immune to that. We could see our prices go right up with them.

“And then potash, if you have been watching the news with Belarus and Russia, those two alone account for 35% of the world’s operating capacity for potash,” Linville continued. “So if those two do get into a war, and all of a sudden, let’s say potash exports just stop, we’ve just lost 35 million tons a year of operating capacity.

Should you bite the bullet and buy now, or wait until spring?

“Number one, take emotion out of your decision making. I know a lot of people are upset about where prices are. A lot of people are angry about where fertilizer prices are and chemicals and seed and everything else. It seems like every time grain prices go up, so does every other input, they want more of their money,” Linville said. “But try to keep as much of a level head as possible. Leave emotion out of the decision-making, but at the other point, in conjunction with that, also make sure you are looking at the decisions for you. What works for, yes, buy it, or no, buy it, may be right for you, but it may not be right for the farmer next to you, for the county next to you, for the state next to you.”

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