Tri-State Neighbor: South Dakota Farm Newspaper

The weather and fertilizer prices played a role in holding fall fertilizer application to its lowest level since 1996.

The Dec. 1 Iowa Crops and Weather Report from the Iowa Agricultural Statistics Service reported application of fall fertilizer was 43 percent complete at the end of November. At the same time last year, 76 percent of the fall fertilizer application was completed and normally 66 percent of the fall fertilizer application is done by this date.

Some farmers have been waiting to make fertilizer purchases and applications as they expected fertilizer prices to drop just as commodity prices and financial markets dropped in the past few months.

David Asbridge, senior economist for Doane Advisory Services, expects fertilizer prices to bottom out.

Speaking at Iowa State University's Integrated Crop Management conference, Asbridge predicted dealer prices for ammonia to be $425 to $450 per ton in next few months. He predicted that urea prices will range from $325 to $350 per ton.

For urea ammonium nitrate (UAN) at 28 percent N, he said dealer prices will range $310 to $325 per ton. For diammonium phosphate (DAP), Asbridge expects it to range from $550 to $600 per ton. For potash, he predicted prices would be $650-700 per ton.

Asbridge said farmers should expect $50 to $75 per ton to be added to the dealer prices.

In surveying farmers, Asbridge expects farmers to cut back phosphate and potash use for the upcoming growing season.

He expects phosphate use to be down 9 percent and potash use to be down 10 percent. Asbridge predicted N use would remain steady. However, he noted most of the U.S. system for ammonia is designed to move ammonia from U.S. plants to the U.S. Midwest. He said there is limited ability to offload ships and ship imports into the Midwest.

He said pipeline, barge and tank space in the Midwest are being fully used. There is a limited ability to increase rail transportation, he said.

Dean Fairchild, assistant vice president of agronomy with Mosaic, said fear that the financial crisis would reduce nutrient demand due to reduced economic growth, reduced credit, reduced crop prices and reduced biofuels demand brought some of the downward pressure into the fertilizer industry.

Other factors in the fall in fertilizer prices include the collapse of raw materials costs, lower fertilizer price expectations pushing demand to the spring and production cutbacks due to full pipelines.

Things that could happen in the spring of 2009 are more stable financial markets, improved credit availability and a commodity price rally, he said.

Other factors include raw material price decreases, recalibrating of crop nutrient prices, pent up nutrient demand and logistical bottlenecks.

Fairchild said an empty pipeline and lost fall production could be problems in the spring as well.

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