Crop prices down, but fertilizer prices not following suit

Supply and logistics issues are keeping fertilizer prices up even though demand in the U.S. has stalled

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Despite low commodity prices, fertilizer prices have not been following the same trend, says an Alberta Agriculture and Rural Development’s market analyst for agriculture inputs.

“Two of the reasons fertilizer prices have not trended down- ward as quickly as grain prices are world supply and U.S. transportation issues,” said Jennifer Stoby. “The world markets are demanding more fertilizer products, while political unrest and low natural gas supplies in some countries have decreased the total amount of fertilizer available to the world market.

“As well, with the large corn and soybean crop in the U.S., and with the competition from oil, getting fertilizer into the hands of retailers has been a logistical challenge for the transportation industry.”

But fertilizer sales have stalled in the U.S., said Stoby.

“High fertilizer prices are also due to the late harvest in the U.S. as well as a reluctance to spend or lack of credit for fertilizer,” she said. “It’s predicted that more soybeans may be planted next spring due to high nitrogen costs which soybeans are not reliant on. As well, with the record-yielding corn crop, a lot of U.S. soils have been depleted of major nutrients. It will take a large amount of product to replenish these soils.”

Alberta sales have also slowed, she added.

“Fertilizer is still being applied here but with the late harvest and some cash or credit crunch issues, producers are moving cautiously. Retailers have reported that fall fertilizer is being applied, but producers are soil testing and looking over their fertilizer needs much more closely than in other years. As well, spring fertilizer purchases have been slow as farmers are waiting for a price decrease.”

Manufacturers are currently hesitant to drop prices and farmers are hesitant to purchase product, said Stoby.

“Who decides to make the first move is yet to be seen,” she said. “Right now, it’s hard to say if prices will continue to trend downward. In most cases, fertilizer prices usually follow corn prices but with external international factors at play there has been some hesitation for fertilizer prices to follow.”

For more information, go to the Alberta Farm Inputs Survey results where monthly fertilizer prices are posted.

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