What’s the outlook for fertilizer supplies and prices this spring? It looks as though prices will be firm and supplies snug.
And if fertilizer demand is greater than expected (unexpectedly strong corn acreage, say), then fertilizer supplies most likely will tighten and prices rise quickly.
On the other hand, a substantial “falling-out-of-bed” of commodity markets generally, and of grain markets in particular, between now and spring likely would lead to good supply availability but only modest downside pressure on prices. That is the outlook in a nutshell -- mostly upside for prices, with very limited downside pressure.
Why is the outlook so lopsided? There are a couple of carryover factors that play significant roles in the outlook for spring.
- The first carryover factor is the caution instilled in the supply chain from the fertilizer price implosion of late 2008/early 2009. That whole episode made many in the industry very cautious this year.
- The second carryover factor is the lack of fall application.
Illinois Production Cost Report (Bi-weekly), as of Feb. 4, 2010. The following information, courtesy of USDA Market News
Production costs items state wide: cash prices bulk, FOB distributor,
per ton unless otherwise stated. Fertilizer in granular form unless noted.
Product Offer Average Change
Anhydrous ammonia 490.00-560.00 520.94 UP 4.14
Urea 46-0-0 389.00-450.00 417.67 DN 2.83
Liquid Nitrogen 28% spread 220.00-270.00 249.50 UP 4.80
DAP(Diammonium Phosphate 18%N 46%P) 430.00-510.00 469.47 UP 22.70
Potash (Potassium) 430.00-510.00 472.44 DN 22.50
Lime (Spread) 15.00-18.50 16.29 DN 0.16
Farm Diesel Fuel per gal <1000 gallons 2.40-2.65 2.56 DN 0.08
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