Fall Fertility 2013: A Return To Normalcy … For Now

Once the dust settles on the 2013 fall fertilizer season, most of the nation’s ag retailers are expecting the year to have played out as expected. And this will be a welcome change from what happened to the marketplace during 2012.

One year ago, many dealerships, cooperatives and their grower-customers were admittedly struggling. In more than half the U.S., drought conditions were not only hurting the nation’s crop mix, these same bone dry days were severely curtailing the amount of fall fertilizer grower-customers were willing (or able, in some cases) to put into their fields.

“Nitrogen [usage] should be okay, but it still requires rain before it can be applied,” said Tim McArdle, COO/vice president for BRANDT, Springfield, IL, last fall when evaluating the market for crop nutrients.

Fertilizer prices, too, were impacted by the drought. In fact, according to Joe Dillier, director, plant food, agronomy division for GROWMARK, Bloomington, IL, price volatility was one of the hallmarks of 2012. “I would posit that fertilizer is the most volatile commodity out there, especially nitrogen-based fertilizers,” said Dillier, speaking at a January 2013 trade event. “With respect to grain, we had the worst drought since the mid-1950s and urea this past year was more volatile than even corn.”

In 2013, however, the outlook for fall fertilizer usage tells a different story. In many ways, it’s a complete opposite of the situations that existed during 2012. An exceptionally wet spring meant many grower-customers were late getting their spring fertilizer application work completed on time – or worse still, even getting their seed into the field at all. But for those that managed to complete their field work on time, a relatively wet and cool summer is expected to mean a big harvest this fall for both corn and soybeans (which USDA numbers predict will be in the 95 million and 77 million ranges, respectively).

Expecting Big Things

Likewise, this bodes well for fall fertilizer usage among grower-customers. “We are expecting a big fall when it comes to fertilizer use from our growers – as long as it stays dry enough,” says Jeff Homan, plant manager for Wabash Valley Service Co., Allendale, IL. “Overall, the crops around our area are looking much better than they did a year ago and that should translate into more fertilizer being applied by these growers to get ready for an equally big 2014 crop season. A good crop year in 2013 will mean that growers will want to take advantage of this plus and do what they can to ensure a strong year in 2014, as is always the case.”

Indeed, market watchers agree that the 2013-14 fertilizer usage should be strong. According to statistics compiled by the International Fertilizer Industry Association, demand for the three major crop nutrients — nitrogen, phosphorous and potash — should hit global numbers of 111.7 metric tons, 43.7 metric tons and 31.9 metric tons, respectively, in the coming year, with North America and Asia driving much of this growth.

Jim Fargo, Centennial Ag Supply, manages the Kersey operation, providing full-service to growers of irrigated corn, vegetables and dryland wheat.
Jim Fargo, Centennial Ag Supply, manages the Kersey operation, providing full-service to growers of irrigated corn, vegetables and dryland wheat.

Still, there are a few notes of caution that run counter to this strong fertilizer demand outlook. In some parts of the country, the long, wet weather conditions have altered the crop mix from fertilizer intensive ones such as corn to other, less fertilizer dependent forms. “In our area this year, we had a 30% loss in planted acres because of the wet weather,” says Jim Fargo, safety and compliance manager for Centennial Ag Supply Co., Kersey, CO. “For many of our growers, this meant a switch from planting corn in their fields to planting wheat instead.”

This crop shift was also noted much further east as well. “Because of how wet it’s been here, more of our growers have planted more wheat than we’ve seen in the past,” says Billy Lowder, facility manager for Crop Production Services (CPS), Albemarle, NC.

Even so, the majority of fertilizer industry watchers think 2013 has the potential to be a very positive year for the marketplace. “All of the ag retailers and growers I’ve talked with are very optimistic that 2013 and 2014 will be very solid fertilizer years, demand wise,” says Kerry Green, managing director for micronutrients supplier Wolf Trax Inc., Winnipeg, MB, CAN. “Given that, I don’t see any big changes in the growth potential or cut-backs in demand, as long as the market doesn’t overreact to some of the changes we’ve recently seen in the overall fertilizer picture.”

No Russian To Judgment

One of these changes is currently playing out in the potash marketplace. As one of the major crop nutrients used by U.S. growers, potash is vital to maintaining and increasing crop yields each season. And for the most part, the nation’s supply of potash comes from two sources — Canada and Russia.

Not surprisingly, the major potash suppliers in both countries have formed business cartels to manage the distribution and sale of this important macronutrient — Campotex in Canada and Betarusian Potash Co. (BPC) in Russia. With these cartels in the mix, potash prices have remained relatively stable for the past several years, with the crop nutrient selling for $900 per ton, on average.

However, on July 31, one of the BPC’s major potash producers, Uralkali, announced it was quitting the cartel, effective immediately, after reaching what the company called a “deadlock” over sales. Instead, Uralkali will now export its potash via a Swiss-based entity, Uralkali Trading.

The break-up of BPC shocked observers. As one market analyst put it upon hearing the news: “It is as if Saudi Arabia decided to leave OPEC.”

Naturally, the financial markets reacted negatively to this news. By mid-day on July 31, shares of all of the North America’s potash suppliers, including PotashCorp of Saskatchewan, The Mosaic Co. and Agrium Inc. lost more than $12 billion of their market value. Furthermore, potash prices were expected to take an immediate hit, dropping 25% to $300 per ton by the end of 2013, with some analysts predicting a further plunge in prices after that.

At presstime, ag retailers in the U.S. hadn’t noted any kind of a drop in potash prices. However, some were expecting it to occur in the near future.

“When we heard about the break-up of the Russian potash cartel, we were told that some kind of price decline might be coming, but it hasn’t shown up just yet,” says Centennial Ag’s Fargo. “But I suppose a crash could be showing up any day now.”

However, according to Bill Doyle, CEO of PotashCorp, talk of this kind of drop in global potash prices is unwarranted. “I don’t know how long it’s going to take, but I don’t see it as a long-term problem at all,” said Doyle, talking via a webcast to analysts and stakeholders in the company. “I would just urge people to take a deep breath and relax. Everything’s going to be just fine.”

West Fertilizer Fallout

Even if the break-up of the Russian potash cartel ends up as a non-factor in fertilizer fortunes going forward, the other big fertilizer event of 2013 — the explosion of the production plant in West, TX — is expected to cause some major ramifications for ag retailers in the coming years.

On April 17, a fire and subsequent explosion at the West Fertilizer Co. fertilizer plant in West killed 15 people and leveled many buildings in the tiny town. Although the ignition that caused the blast is still under investigation, it was determined that some 270 tons of ammonium nitrate stored at the facility was the reason the explosion was so destructive.

Since that event, any facility that distributes fertilizer as a regular part of its business has been under more intense scrutiny, from both the popular press and regulators. Luckily, as Kathy Mathers, director of public affairs for The Fertilizer Institute, points out, the number of facilities that actually keep ammonium nitrate on their grounds has dropped significantly in the past few years.

“There are more than 6,000 fertilizer facilities in the U.S., but less than 2% of them actually sell ammonium nitrate,” says Mathers. Still, she adds, it remains a popular fertilizer in places such as Central Texas, where the alkaline soil can react negatively with alternative forms of nitrogen-based fertilizer.

In early August, Paul Derig, environment, health and safety (EHS) manager for J.R. Simplot Co. testified before a House of Representatives subcommittee hearing on behalf of the Agricultural Retailers Association (ARA) regarding the West, TX, fertilizer situation. In his presentation, Derig made the following key points:

  • The industry would form ResponsibleAg, a new member-led performance management system that will establish foundational EHS practices with third-party inspections overseen.
  • There is a need for permanent or long-term reauthorization of the Chemical Facility Anti-Terrorism Standards (CFATS) program for regulatory certainty.

On behalf of ARA, Deng also recommended several enhancements to the CFATS program and the Ammonium Nitrate Fertilizer Registration Program, including the targeting of unidentified chemical facilities through intergovernmental and industry cooperation and a reassessment of CFATS small facility compliance burdens.

“The CFATS program is not perfect, but it’s broken,” said Deng. “At this stage, it could benefit from stricter timelines, measurable and accountable metrics and tangible action-based outcomes.”

He also called for a reevaluation of the Ammonium Nitrate Fertilizer Registration Program itself. “In 2005, ARA testified in support of the Secure Handling of Ammonium Nitrate Act to seek traceability regulations for ammonium nitrate, and this legislation was signed into law in 2007,” he said. “However, it has now been nearly six years since this law was enacted and the Department of Homeland Security has not implemented a final rule.”

As a matter of company policy, many ag retailers have dropped ammonium nitrate from this fertilizer product mix. “We haven’t carried it in many years due to our parent company’s mandate,” says Wabash Valley’s Homan.

Despite this fact, other ag retailers predict more regulations are coming for all fertilizer dealers, regardless of whether or not they handle ammonium nitrate. “I think it’s coming,” says CPS’ Lowder. “That’s part of the reason we’ve spent the better part of the past year upgrading our fertilizer building, even though the state of North Carolina hasn’t required us to do so.”

Centennial Ag’s Fargo agrees. “We are already seeing stricter regulations on how companies in our state transport fertilizer products via railroad,” he says. “And this may only be the beginning for ag retailers like ourselves.”

Topics:

Leave a Reply

Fertilizer Stories

Flooded corn in Indiana
FertilizerBoth Wet and Dry Conditions Threaten Nitrogen Loss
May 15, 2017
The weather is notoriously unpredictable, leading to challenges for planting, harvesting and applying the nitrogen (N) your corn crop needs. Read More
Iowa waterways
FertilizerDow AgroSciences Recognizes Ag Retailers’ Role in Protecting Iowa Water Quality
April 6, 2017
The state of Iowa and its agriculture community have worked for decades to preserve soil health, protect water quality and Read More
Yara West Sacramento Ribbon Cutting
Crop InputsYara West Sacramento Is Newest Addition
March 27, 2017
Yara’s West Sacramento Terminal was officially welcomed March 21 as the newest Yara North America facility in the U.S. While continually Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teaching Fertilizer Education
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
Trending Articles
Migrant farm workers
LegislationTrump: Immigration Crackdown Won’t Impact U.S. Agriculture
May 16, 2017
President Donald Trump said he would seek to keep his tough immigration enforcement policies from harming the U.S. farm industry Read More
AGCO Ratliff featured
Eric SfiligojRemembering Robert Ratliff
May 15, 2017
With all the fast-paced happenings in agriculture this spring, with multiple mergers in the works and planting season in full Read More
Case sprayer nozzle closeup
EquipmentSpray Application: A Nozzle Renaissance
May 2, 2017
If you had asked four-decade ag veteran Mark Bartel, President of Wilger Inc., just a few years ago what lay Read More
ManagementWashington Update, Dow-DuPont Earnings, and the Passing of an AGCO Legend
April 27, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about the latest Beltway news, crop protection company 1st quarter numbers, and the Read More
Crop InputsFlying Under the Radar No More, FMC Goes Big
April 13, 2017
Describing FMC as “under the radar,” admittedly, is probably a stretch. But in a snap of the fingers, FMC upped Read More
Young Corn Plants
Crop NutritionStill Hunting Yields
April 1, 2017
There’s no denying it — the agricultural marketplace today is undergoing a fundamental shift in fortunes. Not too many years Read More
Latest News
Photo credit: The United Soybean Board/The Soybean Checkoff.
Seed/BiotechKansas State University Researchers Find New Pathogens …
May 24, 2017
A single seed seems so simple. Put it in the ground, give it some care, and you’ve soon grown food. Read More
Soybean Field
HerbicidesNew Dicamba Herbicide Premix Coming Soon from Syngenta
May 24, 2017
Syngenta has announced the name of its new herbicide featuring the active ingredients of S-metolachlor and dicamba. Upon registration by Read More
Eric SfiligojMonsanto ‘Picks Its Battles’ by Nixing Deere Deal
May 23, 2017
Having been in the trade journalism game since the mid-1980s, I remember several watershed moments during my career. One of Read More
FungicidesSyngenta Launches New Seed Treatment Fungicide
May 22, 2017
Syngenta has announced the launch of PLENARIS seed treatment fungicide for the control of downy mildew in sunflower. PLENARIS contains Read More
Corn close up
Crop InputsMonsanto’s First HPPD Herbicide Garners EPA Appro…
May 19, 2017
Monsanto announced today that EPA has federally approved Harness MAX Herbicide, the first herbicide in the Monsanto portfolio to provide Read More
ManagementPrecision Planting Deal, China Developments, and Enviro…
May 18, 2017
Editors Eric Sfiligoj and Dan Jacobs discuss the latest news on John Deere’s now dead deal for Precision Planting, China’s Read More
Soybean aphid leaf
InsecticidesMulti-state Research Reveals IPM Best Option for Treatm…
May 17, 2017
About 89.5 million acres of soybeans will be planted across the U.S. in 2017 — a record high, according to Read More
GROWMARK-2017-Interns
CropLife 100GROWMARK Names 2017 Summer Interns
May 16, 2017
Forty-two college students are exploring agricultural career opportunities this summer as GROWMARK interns. They are working at FS member cooperatives Read More
Migrant farm workers
LegislationTrump: Immigration Crackdown Won’t Impact U.S. Ag…
May 16, 2017
President Donald Trump said he would seek to keep his tough immigration enforcement policies from harming the U.S. farm industry Read More
Flooded corn in Indiana
FertilizerBoth Wet and Dry Conditions Threaten Nitrogen Loss
May 15, 2017
The weather is notoriously unpredictable, leading to challenges for planting, harvesting and applying the nitrogen (N) your corn crop needs. Read More
farmer Kip Tom
Precision AgAg Tech: On the Cusp of Something Big?
May 15, 2017
The investment and ag-tech sectors’ continuing courtship of agriculture, smoldering for three or four years now, was well in evidence at Read More
AGCO Ratliff featured
Eric SfiligojRemembering Robert Ratliff
May 15, 2017
With all the fast-paced happenings in agriculture this spring, with multiple mergers in the works and planting season in full Read More
Greg Musson, Gar Tootelian
ManagementOpinion: Shaking Your Perspective in Ag Retail
May 12, 2017
Some of you I’m sure have encountered our recently retired salesman extraordinaire, Dan Bellanger. He worked in the industry for Read More
Exterior view of CPS Big Lake facility which includes enclosed receiving and load out area
CropLife 100New Alternative Weed Resistance Traits Could Experience…
May 12, 2017
It wasn’t too many years ago that ag retailers and their grower-customers could hardly wait for new options to fight Read More
Diane Allemang and Dan Jacobs
Crop InputsFMC Agricultural Solutions, Casa Pacifica Partner to He…
May 11, 2017
FMC Agricultural Solutions is teaming up with Casa Pacifica Centers for Children and Families, an organization that supports vulnerable children Read More
UncategorizedWhat’s Up With ARA
May 11, 2017
CropLife Editor Eric Sfiligoj talks with Brian Reuwee regarding what issues are on the docket for the Agricultural Retailers Association. Read More
BASF Maglis tablet retailer grower
Precision AgQ&A: What BASF’s Latest Foray into Precision …
May 11, 2017
In late April, BASF agreed to acquire U.S. precision ag player ZedX, a leader in the development of agronomic weather, Read More
Pam Marrone
Crop InputsMarrone Bio Innovations Enters into Distribution Agreem…
May 11, 2017
Marrone Bio Innovations, Inc., a leading global provider of bio-based pest management and plant health products for the agriculture markets, Read More