Logistics issues, strong demand could keep pressure on fertilizer prices
Farmers who finished harvest and are turning their attention to other fieldwork should consider booking fertilizer soon if it’s on their fall to-do list.
Published: Oct 12, 2012
Post-harvest demand for fertilizer so far is stronger than expected.
The strong demand, combined with logistics issues that have delayed shipments, likely will keep pressure on fertilizer prices into winter, according to Joe Dillier, director of plant food at GROWMARK.
“We have the potential to get pretty snug (on the supply side),” Dillier told FarmWeek. “Prices likely will remain pretty steady with the potential to move up some as we go.”
Some suppliers have had to wait twice as long to obtain fertilizer due to shipping issues caused by low water levels on the Mississippi River.
For instance, a barge that normally carries 1,800 tons of fertilizer currently can transport about 1,400 to 1,500 tons.
In some cases, particularly down river, suppliers are not able to offload barges at some warehouses.
“The river is complicating things,” Dillier said. “It’s probably taking twice as long to ship stuff.
“How much that (shipping delays) is felt (on the market) depends on how big demand turns out to be.”
Fall demand for anhydrous ammonia, phosphorus, and potassium two months ago was projected to decline anywhere from 40 to 60 percent. Drought-stressed crops, particularly in fields that were mowed or chopped, didn’t pull as many nutrients from the soil and thus those fields won’t require a great deal of nutrient replenishing.
But, based on activity so far this season, it appears demand may be off only about 20 percent, rather than 40 to 60 percent.
“Two months ago everybody was saying we’d have really light fall movement (of fertilizer),” Dillier said. “But we’re seeing good demand so far.”
Check prices at the Illinois Production Cost Report.
Prices could increase this fall, but Dillier doesn’t expect anything similar to the spike seen in 2007-08 when fertilizer prices jumped as much as 50 to 75 percent.
He recommended farmers who plan to apply fall fertilizer book it soon.
“My recommendation to the farmers is, if you need product, go ahead and get it, especially ammonia and phosphate. You don’t want to be the last guy to call the dealer.”
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