Illinois fertilizer prices slowly rising

Higher natural gas prices are being linked to recent hikes in the price of anhydrous ammonia, says U of I's farm management specialist Gary Schnitkey.

John Hawkins

Published: Oct 31, 2012

According to the AMS Illinois Production Cost bi-weekly report, the average anhydrous ammonia price in Illinois currently is $853 per ton, an increase over the $815 per ton price at the beginning of August. Diamonnium Phosphate (DAP) price is $628 per ton and potash price is $599 per ton. Both DAP and potash prices have been stable since August.

Even given recent natural gas price increases, natural gas prices currently are lower than they were during much of the mid to late-2000s. Schnitkey says the introduction of fracking has led to large increases in reserves that can be economically produced, leading to expectations of continued lower natural gas prices into the foreseeable future.

Lower price expectations are leading to firms to invest in industrial production that uses natural gas, including production of nitrogen fertilizer. Recently, Orascom Construction Industries announce plans to build a nitrogen fertilizer plant in Iowa.

According to an October 24th Wall Street Journal article, CF Industries also is building fertilizer capacity. Schnitkey says the ability to build capacity will be influenced by regulatory burdens, as well as "Not in My Backyard" concerns.

While long-term in nature, additional nitrogen fertilizer production would likely lead to the ability to more adequately meet nitrogen fertilizer needs, causing lower nitrogen prices.

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