Most are expecting a significant swing in acreage this spring favoring soybeans, as beans are currently returning better margins for 2017 as compared to corn. Last year the U.S. planted 94 million acres of corn per the USDA, and 83.4 million acres of soybeans; this year, some are suggesting plantings for each crop will be around 88 million acres.
If that turns out to be true, less corn acreage will drive lower fertilizer demand this spring. Also, as we’ve discussed, we have new fertilizer production that’s coming on stream now—from new projects in Port Neal, IA (nitrogen), Wever, IA (nitrogen) and in Saskatchewan (potash).
Given all of this, fertilizer supplies should be ample this spring, right?
Yes and no. Information about the new projects is pretty tight-lipped, but it generally appears that they are coming on-line in “fits and starts”, as major projects like these typically do. It looks like they won’t “plus” Midwest fertilizer supply by much for this spring.
As well, if last fall’s demand for P and K is any indication, spring demand for fertilizers has the potential to surprise to the upside. Fall application was well up year over year, as crop yields were very strong again in 2016, and so some wanted to rebuild nutrient levels. Another factor had to have been fertilizer pricing itself. Fertilizer prices have been trending consistently lower for the past couple of years, and this past summer they hit lows that had not been seen in more than a decade in some cases.
Prices have now bounced up from those summer bottoms, but should still be very attractive for spring, even taking into account lower crop prices. This is especially true for K, but applies to N and P too.
Aside from demand, another reason for the bounce up in prices has been that China shut down a substantial portion of its nitrogen production because of cheap global nitrogen prices. China cut its urea exports way back the past several months, in turn pushing prices back up…in spite of the bringing-on of new production capacity here in North America. Chinese production is a factor to keep an eye on longer term too.
The bottom line for the spring fertilizer-outlook here? Fertilizer may be the best value crop input there is today, as prices remain historically attractive. At the same time, prices look to be firm to spring. Given all that, you may want to line up your spring needs sooner rather than later.
Joe Dillier serves as the GROWMARK director of sales and marketing for crop nutrients. He can be reached at email@example.com.