Fertilizer Market: Staying Strong

Editors’ Note: To get some perspective on the 2008 fertilizer marketplace, CropLife® talked with David Delaney, president of PCS Sales, PotashCorp. Here, we present his insights into what’s ahead for the spring season.

Q: What is the outlook for the coming spring season?
A: We expect an extremely busy season. The sub-prime financial turmoil that continues to affect the U.S. housing industry and general markets has had next to no impact on global agriculture. Strong 2007 world economic growth in the 5% range included a Gross Domestic Product (GDP) increase by 11% in China, 9% in India, and more than 6% in several other major developing countries.

Such growing economies are providing people in these countries with better incomes, allowing them to increase their protein consumption by eating more meat. This is pushing up demand for the crops that feed the animals which produce this meat.

In addition, global energy prices have skyrocketed. Crude oil recently touched $100 per barrel as production costs continue to escalate and concern grows about availability of supply from areas of political tension.

The need to improve the security of the domestic transportation fuel supply and a desire to lessen this fuel’s impact on climate were major factors in the new Energy Bill receiving Pres. George Bush’s signature in December 2007, which mandates production of 36 billion gallons of renewable fuels by 2022. If all of this was ethanol produced from corn, the corn requirement would be equivalent to the entire 2007 U.S. crop. However, the bill encourages future development of other renewable fuels by capping ethanol production at 15 billion gallons per year, equal to about 40% of the corn crop.

The U.S. ethanol industry must grow rapidly to meet the 2008 standard of 9 billion gallons. Beyond 2008, the new Energy Bill is expected to keep pressure on the U.S. grower for more production, which will need more fertilizer.

The rising world demand for food, feed, fiber, and biofuels has strengthened demand for crops. The January USDA Crop Report reduced the global wheat and coarse grains stocks-to-use ratio to 14.1%, an all-time low. Such tight crop fundamentals have raised USDA’s latest projections for average 2008 U.S. farm prices per bushel to $4 for corn, $6.65 for wheat, and $10.40 for soybeans. In global markets, prices for commodities such as rice, palm oil, cocoa, bananas, and rubber are also very strong.

U.S. and world growers are responding to these strong prices by applying more fertilizer to increase crop yields. In many parts of the developing world, fertilizer applications are substantially below ideal levels — particularly for potash — and demand is increasing dramatically, stretching the ability of fertilizer producers around the world to respond. The result has been a tight supply/demand balance for nitrogen, phosphate, and potash.

This spring, we expect growers in the U.S. and the rest of the world to plant as much as they can and to target their fertilizer application toward obtaining high crop yields. Fertilizer supplies are expected to again be very tight.

Q: Are supply logistics expected to affect the U.S. spring season?
A:
Until recently, U.S. railway capacity provided some room for seasonal surges in fertilizer requirements, but that luxury is gone. Putting fertilizer into position to meet the spring demand is now a big challenge. Producers are working closely with the rail lines and their customers to ensure the logistics run as smoothly as possible for the coming season to have product available where it is needed.

Q: Briefly, what is the longer-term outlook for agriculture and fertilizer supply/demand?
A: The improving incomes and increased demand for crops for food, feed, fiber, and biofuels discussed earlier have shifted crop consumption into a higher gear and prices upwards to a new range, and placed supply pressures on fertilizer producers. Sub­stantially higher capital costs have delayed the installation of new global capacity and contributed to the tight supply/demand balance. 

Growers around the world are benefiting from the need for more crops and the resulting higher prices. The 2007 U.S. net farm income was close to a record. Growers know what fertilizer can do for them and the strong income level is expected to allow them to apply what they need.

The outlook for global agriculture and for our industry is bright. We look forward to the challenge of supplying the products growers must have to meet the world’s crop requirements.

Leave a Reply

Fertilizer Stories

Crop InputsLand O’Lakes Announces Minnesota Water Quality Partnership
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
Crop Inputs2013 West Texas Tragedy Ruled A ‘Criminal Act’ [Updated]
May 11, 2016
A 2013 fertilizer plant blast in West, TX, that killed 15 people and injured 160 others was caused by a Read More
Young Corn Field
Crop NutritionEnhancing In-Season Nitrogen Use Efficiency Is In The Details
May 5, 2016
Spring is here and crops are in the ground. Do you have a plan for your nitrogen during the growing Read More
Truck dumping dry fertilizer
FertilizerFertilizer Logistics Q&A: Southern States’ Joe Wlodkoski
May 2, 2016
Joe Wlodkoski, Director of Agronomy Procurement, Fertilizer, Southern States Cooperative, is a 40-plus year fertilizer industry veteran. He is quite Read More
Trending Articles
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Aerial Drone
Precision AgA Deeper Dive Into The Future Of Precision Ag
May 9, 2016
For about two decades now, through the good and the bad times, the ups and the downs inherent in agriculture, Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncontrolled Weeds
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
Latest News
ManagementWashington Visit and Bayer/Monsanto Deal Update
May 26, 2016
Editors Paul Schrimpf and Eric Sfiligoj discusses a recent trip to DC and the latest news on the proposed pairing Read More
Fertilizer closeup in hand
Industry NewsVerdesian: Striking A Balance Between Yield & ROI
May 26, 2016
Finely tuned nutrient management plans are helping farmers throughout the U.S. improve nutrient use efficiency, increase return on investment (ROI) Read More
Crop InputsLand O’Lakes Announces Minnesota Water Quality Pa…
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Corn close up
Crop InputsArysta LifeScience Establishes Global Headquarters In R…
May 25, 2016
Arysta LifeScience has announced plans to relocate its global headquarters from West Palm Beach, FL, to Cary, NC, over the Read More
fertilizer blending and storage, Top 100
BlendersCHS Dakota Expansion Features AGCO’s GSI InterSys…
May 25, 2016
The continued growth of precision agriculture has increased farmer use of customized fertilizer blends best-suited for their soil conditions. Several Read More
ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Topcon’s X30 display with CropSpec sensors
EquipmentGPS Autosteer Systems: Product Updates From Precision A…
May 24, 2016
Throughout 2015 GPS Steering solutions continued to evolve from what was once an after-market add on, to today’s cab where Read More
Trimble TMX-2050 In-Cab Display
Eric SfiligojThe Precision Ag Revolution Continues
May 24, 2016
It’s funny how much “the first time” tends to mean to someone as they get older. I sometimes can’t recall Read More
Eric Wintemute, AMVAC
Precision AgAMVAC Ups The Ante With New Precision Ag Technology
May 24, 2016
A potentially industry-changing at-plant soil treatment system from American Vanguard Corp., or AMVAC, is coming soon to large growers in Read More
Dry and Liquid Plant
CropLife 100CropLife 100 Map
May 24, 2016
The new CropLife 100 map shows the locations of each of the headquarters of the 2015 CropLife 100 retailers. The interactive Read More
Southern States Cooperative
Corn Field
Industry NewsTiger-Sul Names Veteran Account Manager To Lead Central…
May 23, 2016
With the continuing growth of the sulphur bentonite and precision crop nutrient industry, global agriculture firm H.J. Baker has announced that Read More
Bayer sign
Industry NewsReuters: Bayer Defies Critics With $62 Billion Monsanto…
May 23, 2016
German drugs and crop chemicals group Bayer has offered to buy U.S. seeds company Monsanto for $62 billion in cash, Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Industry NewsCompass Minerals Hires Industry Veteran To Lead Plant N…
May 19, 2016
Compass Minerals has hired plant nutrition industry veteran Vatren Jurin to steer the company’s portfolio expansion into specialty liquid micronutrient Read More
ASMARK Retailers LIVE! Tour 2016 Group shot The Andersons
CropLife 100The Andersons Rejects Unsolicited Proposal From HC2
May 19, 2016
The Andersons, Inc. has announced that its Board of Directors has rejected two non-binding, highly conditional, unsolicited proposals from HC2 Read More
glyphosate
Crop InputsWHO: Glyphosate ‘Unlikely’ To Cause Cancer
May 16, 2016
Via Reuters.com reporter Kate Kelland: The weed-killing pesticide glyphosate, made by Monsanto and widely used in agriculture and by gardeners, Read More