Fertilizer Fears: Deja Vu All Over Again?

As during 2008 and 2009, much of the future for the ag retail marketplace hinges on the performance of the fertilizer category. As the largest component of the industry’s sales volume at $10.1 billion, fertilizer’s price collapse during mid-2008 started the ag market down the revenue decline path it just now is getting out of. And some retailers are already reporting supply problems are re-appearing.

“Supply has been the biggest concern, at many periods during the calendar year, we have been told a supplier does not have product available, or call for availability,” says Frank Schumacher, agronomy division manager for Mountain View Co-op, Black Eagle, MT. “If we do not contract tons in advance we have trouble buying in season. That said, we are always able to find product, yet we are limited on the number of tons we can buy at any time. Transportation has been tighter than recent years but not enough to cause major issues.”

Others blamed a lack of communication with grower-customers for causing some fertilizer headaches. “It is very different than it used to be,” says Rod Silver, president at Mid-West Fertilizer, Inc., Paola, KS. “The farmers stopped telling us their plans and we chose not to take full risk of inventory because of the volatility, hence the phosphorous and potassium problem.”

Could all these uncertainties lead to a repeat of 2008? Retailers are divided on this question. “Inbound fertilizer shipments have been sporadic with periods of empty bins,” says Doug Busdeker, area general manager, farm centers for The Andersons, Inc., Maumee, OH. “Pricing seems like a repeat of two years ago. Early harvests and low inventories at the start of the fall application season were a problem. Retailers will likely fill bins earlier. Whether prices crash or not seems related to world fertilizer markets, commodity prices and grower demand. Everyone is skeptical considering current higher prices and should commodity prices decrease substantially, grower demand would slow as well.”

“I am concerned about price points on fertilizer when retail price levels rise to the point where they start to limit end-user purchases,” says Wade Blowers, COO for Hamilton Farm Bureau, Hamilton, MI. “With natural gas prices remaining low, I do not see nitrogen manufactures slowing down given the manufacturing margins that are available right now. My concern would be that at what point does supply start to push over demand based on these manufacturing opportunities? This dynamic could ultimately result in downward retail price pressure, as I question if there are will be supply issues with nitrogen.”

Mountain View’s Schumacher also sees growers as the key to this question. “A crash will depend on the growers,” he says. “If they refuse to buy fertilizer at the current or higher price levels, demand will fall and it seems like the producers will have to react. Some fertilizer producers are starting to report record earnings again. That to me is an indication this is a demand driven market and they are taking full advantage of low raw material (natural gas) costs and making a healthy profit. If demand falls, they have room to reduce the price and still make a profit. Our growers are hesitant to buy fertilizer now due to the rise in price. The caveat is the corn grower who can afford to pay the price if he has $6 corn.”

In particular, some retailers point to phosphate as a potential trouble fertilizer in 2011, at least in having access enough to fill grower-customer needs. “A phosphate shortage appears to be here,” says Schumacher. “We have our largest sales period in the fall for planting winter wheat. We had a short period where phosphate was not available for seven to 10 days. We were put on allocation after that. Currently, we have to buy tons of future delivery in bits and pieces. It is questionable if there will be a winter fill program.”

However, other retailers aren’t as certain there is a shortage. “I personally don’t think so,” says Mid-West Fertilizer’s Silver. “We are the highest market in the world now, so we are attracting imports. If the market does not go too far, we should be okay as long as grain prices stay up.”

Leave a Reply

Fertilizer Stories

FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
Aerial view of the West Fertilizer explosion site
FertilizerFertilizer Companies Blame City For West, TX, Explosion
August 6, 2014
El Dorado Chemical Co. and CF Industries contend the city failed to properly train the first responders and had insufficient protocols in place to battle the April 17, 2013, blaze at West Fertilizer Co. that triggered the explosion. Read More
FertilizerThe Fertilizer Institute: New President, Renewed Energy
February 3, 2014
Chris Jahn relishes the opportunity to lead the organization through the challenging times ahead. Read More
FertilizerA New Cycle For Fertilizer Demand
January 2, 2014
Changes in the corn market could have a major impact on the crop nutrients sector in 2014, say experts. Read More

Trending Articles

InsecticidesNew Research Study Shows The Value Of Neonics
October 29, 2014
The study evaluated seed treatment, soil and foliar uses of neonicotinoid insecticides in the U.S. and Canada. Read More
Crop InputsPlatform Specialty Products To Acquire Arysta LifeScience
October 20, 2014
Once the acquisition is complete, Platform Specialty Products will combine Arysta LifeScience with previously acquired companies Agriphar and Chemtura Crop Solutions. Read More
Seed/BiotechMonsanto Offers New Support For Ferguson, Area Communities
October 8, 2014
Monsanto Co. has committed $1 million in new support for several collaborative efforts in Ferguson, MO, and surrounding communities in North St. Louis County. Read More
Seed/BiotechUnapproved Genetically Modified Wheat Found In Montana
October 3, 2014
USDA reports that one year after discovery of Monsanto's unapproved wheat in a single Oregon field disrupted U.S. wheat export sales, the GMO wheat has again been found in Montana. Read More
Equipment2014 Product Of The Year Voting
September 19, 2014
The deadline to vote for the 2014 CropLife IRON Product of the Year is October 31. Please cast your vote today to help us determine the winner. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More

Latest News

Seed CareSeed Care Success Stories: Hefty Seed And Monsanto BioA…
November 1, 2014
Growers in the Dakotas have always looked for extra ways to boost crop nutrients to their seeds, with plenty of help from their ag retail partners. Read More
Seed CareThe Growing Importance Of Seed Care
November 1, 2014
Ag retailers continue to value the seed treatment portions of their businesses — as do their grower-customers. Read More
Seed CareGrowing The Future Of Seed Treatment Equipment
November 1, 2014
Seed treatment equipment manufacturers are focusing on flexibility and customer stewardship. Read More
Soybean Field
Seed CareState Of Seed Care Study: Top 8 Key Findings (Infograph…
November 1, 2014
Results from our survey of ag retailers provide valuable insight into the state of the seed care industry. Read More
StewardshipTFI Recognizes Michigan, Maryland Farms For 4R Stewards…
October 31, 2014
As farming practices increasingly attract interest from the general public, two farmers are ensuring they meet public approval. Read More
Eric SfiligojBig Brother Is Already Watching
October 31, 2014
Opponents to UAVs seem to think they could be used to spy on other people. But spying is already taking place, through the Internet. Read More
StewardshipAsmark Institute’s New Training Center Focused On…
October 31, 2014
The newly dedicated Ford B. West Center for Responsible Agriculture will be used as a national training and education center for professionals in the ag input industry. Read More
StewardshipCTIC Tour Dives Deep Into Everglades
October 31, 2014
The most recent Conservation In Action Tour (CTIC) hit South Florida recently to tour the Everglades Agricultural Area. Read More
StewardshipResponsibleAg Begins Auditor Training
October 31, 2014
ResponsibleAg auditor training is now underway at the Ford B. West Center for Responsible Agriculture in Owensboro, KY. Read More
CropLife 100ValueAct Buys Stake In Fertilizer Dealer Agrium
October 30, 2014
ValueAct has bought 8.2 million shares in Calgary, Alberta-based Agrium, making them the second largest investor in the fertilizer dealer. Read More
InsecticidesNew Research Study Shows The Value Of Neonics
October 29, 2014
The study evaluated seed treatment, soil and foliar uses of neonicotinoid insecticides in the U.S. and Canada. Read More
StewardshipUSDA To Provide $4 Million For Honey Bee Habitat
October 29, 2014
Agriculture Secretary Tom Vilsack announced today that more than $4 million in technical and financial assistance will be provided to Read More
Crop InputsValent Launches New Low VOC ProGibb LV Plus Plant Growt…
October 29, 2014
ProGibb LV Plus PGR is a high-potency, liquid gibberellic acid formulation designed to comply with California’s new air quality standards for high volatile organic compound agricultural products. Read More
Crop InputsBayer CropScience Acquires Certain DuPont Crop Protecti…
October 29, 2014
Bayer CropScience and DuPont Crop Protection have signed an agreement for Bayer to purchase certain DuPont Crop Protection Land Management assets in the U.S., Canada, Mexico, Australia and New Zealand. Read More
ManagementWest Central Names New President
October 29, 2014
West Central’s board of directors have announced their unanimous decision to name Milan Kucerak President and CEO-elect following Jeff Stroburg’s retirement at the end of the fiscal year. Read More
InsecticidesValent U.S.A., MGK Form Marketing Agreement
October 24, 2014
Valent has formed an agreement with Minneapolis-based MGK to manage the marketing and sales of MGK’s crop protection line of insect control products within the U.S. beginning April 1, 2015. Read More
StewardshipFlorida’s 4R Advocate Keeps Improving
October 24, 2014
Florida farmer Alan Jones uses the 4R principles of nutrient stewardship as the core of his fertility program, which allows him to maximize production and keep costs in check. Read More
Seed/BiotechMonsanto Named One Of The World’s Best Multinational …
October 23, 2014
Monsanto ranked No. 8 in the world’s largest annual study of workplace excellence that identifies the top 25 best multinational companies in terms of workplace culture. Read More