STU ELLIS: Fertilizer is a moving target

Residents in the central US are facing a potential record-breaking heatwave this month, as temperatures soar over 100F.

Anyone looking for a job that changes daily should apply to work anywhere in the fertilizer industry.

While a pile of potash might be boring in itself, the world around it and the entire fertilizer world is dynamic, including supply, demand, pricing, international intrigue and many other esoteric facets.

Grandpa would spread manure on the field to supply nitrogen. Then he would have phosphate and potash delivered to his field and use an 8- or 10-foot wide spreader to dribble out granules over an 80-acre field by the time the sun was below the horizon. He would be amazed at fertilizer today.

Today’s cost of fertilizer is one of the biggest dynamics in agriculture. Anhydrous ammonia, the primary source of nitrogen for most farmers, was less than $500 per ton when it was applied in the fall of 2020. It topped about $1,600 per ton in the spring of 2022. It was entirely caught up in the sanctions placed on Russia for its invasion of Ukraine.

With ammonia requiring natural gas for its production, the bans on Russian natural gas, high natural gas costs in Europe due to cold weather, and other factors caused farmers to shell out more for nitrogen for their 2022 corn crop. There was still price spillover for fall 2022 and spring 2023 anhydrous application to corn ground. During the spring and summer it has plummeted nearly $1,000 per ton, and 33% just since the first of August.

Other forms of nitrogen such as urea and UAN have also declined in price to be competitive. But in some locations, those products have dropped faster in price than anhydrous ammonia and farmers are calculating the possibility of changing their typical choice of nitrogen for their next corn crop after a price comparison.

The location makes a big difference also, which may dictate the source of the fertilizer, and how it was shipped to the dealer. Normally most of the fertilizer applied in the Corn Belt is delivered by barge on the Mississippi River, originating from Florida phosphate mines, or imported from other nations and delivered to Gulf terminals.

Russia and Belarus supply major quantities of global potash demand. Morocco has phosphate reserves, but its exports are subject to tariffs because of Moroccan government subsidies. China is a source of phosphate, when it needs money, and opens its supply to the world. Both of those are just now happening. Then India will periodically jump into the global market and take off large quantities that change the global supply availability.

Then there are major North American fertilizer suppliers, whose revenue has declined too far lately due to over-supply and have decided to restrict production by various means to regain a handle on the supply and restore their desired profitability.

Something in the fertilizer industry makes headlines everyday in Reuters and Bloomberg, and based on the annual needs of the Corn Belt farmers, they may be pushing their farm kid to learn the fertilizer industry before returning to the farm.

STU ELLIS

Stu Ellis is an observer of the Central Illinois agriculture scene.

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