Fertilizer prices to level off before seasonal spring rally

CNSC — North American fertilizer prices have been on the rise over the past month, but are expected to level off until the spring, when the market should see a seasonal rally.

Tight supplies have helped to contribute to the recent price rally, said Rick Rempel, vice-president of marketing for Western Canada with Agrico Canada.

“The supply of (fertilizer) has been disrupted by less imports into the US and some minor production issues at some of the plants,” said Rempel.

Nitrogen and phosphate prices have both been rising, but are expected to drop off ahead of the spring, David Asbridge, president and senior economist with NPK Fertilizer Advisory Service in Missouri.

“Nitrogen prices, we expect them to kind of calm down a little bit to drop off a few dollars and then kind of drift along,” Asbridge said. “And then start a seasonal rise into the spring season, probably the end of February, first of March or so.”

Phosphate prices are also expected to see a drop off before seeing a slight rally in the spring, as supplies are expected to be more than adequate by the time farmers are ready to apply them to their fields.

“There’s plenty of product out there, it just doesn’t happen to be right here right now,” Asbridge added. “And, of course it’s only the middle of January, we can’t use it anyway.”

Potash prices have been trending lower recently, but are expected to see a slight recovery and seasonal spring rally as well.

Many Canadian farmers have already covered their fertilizer needs for the upcoming spring because prices were very attractive this past fall.

But some producers still have some products to buy to fertilize the crops they plant this spring.

“There might be anywhere from 25 per cent to maybe 40 per cent, that still has to be purchased,” Rempel said. “It depends on the location, and a few other factors.”

Some farmers who are still short on fertilizer might decide to purchase now, but others will wait until the spring, said Rempel.

How many supplies there are in North America in the coming months and where prices move this spring will also depend on the weather, Asbridge said.

“If it’s a season like 2012, where farmers in the US were actually out putting fertilizer down in January and February, which is extremely unusual, then we could see a lot of upward pressure on prices,” he added.

Logistics issues moving fertilizer supplies into both Canada and the US may also arise and cause some shortages of certain products.

In the U.S., the upper Mississippi river may remain frozen longer than normal if temperatures remain as cold as they have been recently, which would cause problems for barges trying to get up the river, Asbridge said.

In Canada, the backlogged grain handling system, due to the large crops produced in 2013-14, may also be problematic.

“It could become a little bit of an issue on the supply side. How much of an effect it will have, I guess it’s too early to tell,” Rempel said. “In Western Canada we still use a lot of trucks to move product around, but certainly terminals are filled by railcars.”

– Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

About the author

explore

Stories from our other publications