Higher fertilizer costs seen across the West in 2021 expected to continue rising
In a recent CoBank press release dated Dec. 1, lead CoBank Grain and Farm Supply Economist Kenneth Scott Zuckerberg commented on sky-rocketed fertilizer prices, which are only expected to continue to impact farmers and co-op suppliers as planning for the 2022 season begins.
Many producers have seen prices surge to new, all-time highs for nitrogen-based fertilizers. Prices are not expected to trend down.
In addition, Big Horn Co-op Riverton Fertilizer Manager Tyler Downing provided a fertilizer outlook and several options producers should consider.
Fertilizer options
The most common fertilizers offered at Big Horn Co-op include: synthetic urea fertilizer manufactured with anhydrous ammonia; an 11-52-0 mono-ammonium phosphate – a combination of total nitrogen and available phosphate – which is used as a starter fertilizer on small grains and forages as well as row and tree crops; potash fertilizer, which helps plants use water and resist drought conditions; and ammonium sulfate, which is used for alkaline soils, explained Downing.
Micronutrients zinc, magnesium and boron can also be added, he said.
According to a report from CoBank’s Knowledge Exchange, fertilizer prices are expected to remain elevated into the near future and through the 2022 spring growing season.
“The sharp rise in fertilizer prices has fueled speculation about a major acreage shift away from corn,” said Zuckerberg in the press release. “We don’t see that happening in 2022. The current ratio of soybeans to corn shows soybean prices remain weak compared to corn. Demand for corn among U.S. ethanol producers is expected to remain strong given the current high fuel prices and record blending margins.”
“Where we sit today from a year ago, nitrogen-based fertilizer has doubled in price, with phosphate being up considerably,” added Downing. “From everything we are hearing and looking into the next few months, I doubt prices are going to change and potentially get a little bit higher from where we are right now.”
Several local producers are looking at not planting corn this year, but instead plan to grow grain, barley or oats and cut it for hay, he said.
Product availability
There have been several factors that have been exacerbating the supply-demand for fertilizer, shared the press release.
“Higher natural gas prices due to production shocks in China and England have been a major factor. A temporary shutdown of CF Industries’ Donaldson fertilizer facility in Louisiana – the world’s largest nitrogen operation – contributed to supply challenges, as did fertilizer export restrictions by China and Russia,” continued the CoBank release.
While availability is a concern for some farm supply cooperatives, Big Horn Co-op has heard differing stories about product availability in the future.
“Big Horn Co-op as a company is very fortunate to have two other fertilizer locations – Basin and Powell,” he said. “Big Horn just built a new plant a few years ago, which allowed us to hold or store a lot more product and for the most part have everything that we’re going to need.”
For now, fertilizer availability doesn’t seem to be a great concern, Downing said.
“Predicting what happens in the fertilizer market is similar to predicting the weather,” he added.
Spring planning decisions
In addition to high fuel prices, shortages of agrochemicals and negative impacts in the supply chain due to the pandemic means a majority of U.S. and western crop farmers and supply cooperatives are feeling the pressure.
“It’s going to make out to be a tough year for a lot of producers trying to balance inflation of not only fertilizer, but the costs of other inputs going up, which makes it tough,” said Downing.
Applying fertilizer during a growing season is a common practice used by most producers, noted Downing, but the tricky part will be making smart farming decisions with higher hay prices.
Given future hay availability, Downing has found producers are concerned in cutting back on fertilizer practices in 2022, because lower fertilizer use could mean higher hay costs.
Today, producers can lock in the current fertilizer price in an effort to prepare for changes ahead.
“At least if prices goes up in the spring, producers have locked in today’s price and it’s not going to get any higher on them,” Downing said. “At the end of the day, what I do is try to help producers adjust their fertilizer blends to fit their budget.”
Brittany Gunn is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylrn.net.
