“Perfect Storm Hits Fertilizer Market, Fertilizer prices down by 50%”

This is the big news of March 2009.   Since last September, wholesale prices of fertilizers have declined dramatically.  In September, fertecon (www.fertecon.com) reported that wholesale prices of anhydrous ammonia at the Gulf of Mexico were over $800 per ton.  In early January, anhydrous ammonia prices were below $200 per ton.  Similarly, diammonium phosphate (DAP) at the Gulf was over $1,000 per ton in September and about $350 per ton in early January.

What happened?  How did wholesale prices fall to a price that was only 25% to 30% of what they were a year earlier?  What happened, of course, was an economic crisis that has pushed down commodity prices, including fertilizer and has tightened credit markets to the point that South America could not purchase fertilizer in many cases.  Also because of the high prices, use of certain fertilizers was down 50% last year, building up inventories in the fertilizer pipeline which also helped to push down prices.  So currently we have prices which are lower, much, much lower than a just one year ago.

But what about the future?  Economic and credit problems will hold back the price somewhat but there are two factors that could push up fertilizer prices in the future.  First, fertilizer costs for planting corn and soybeans will be much lower and this may stimulate farmers to plant much more and as a result push up a demand for fertilizer.  Second, Russia and the Ukraine are making moves to cut back the supply of natural gas to Europe.  If this happens, there is a good chance that natural gas prices and thus nitrogen prices will go up. 

In summary, things are bad economically now and this has driven down the fertilizer prices to where they were two years ago. But there is definite upside risk that the storm will fade, and that additionally, new factors such as government action in the carbon area, will result in driving prices higher. 

How does this effect growing North Carolina Fraser Fir Christmas trees?  It is a good time to try to meet your phosphorus needs, don’t forget to incorporate the fertilizer.  Unfortunately potash is still at an all time high.  Don’t give up on trying to meet your nitrogen needs with clover and other nitrogen - fixing ground cover.  Happy Spring planting.