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

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

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
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More
EquipmentNew Holland Acquires Miller-St. Nazianz
September 3, 2014
The assets of Miller acquired as part of the transaction will become part of New Holland Agriculture, a CNH Industrial brand, building on a successful four-year partnership between the two companies. Read More
CropLife 100Pinnacle Acquires East Kansas Chemical
September 2, 2014
Ranked 82nd on the CropLife 100, East Kansas Chemical will operate as part of Pinnacle's Performance Agriculture brand. Read More
MAGIE 2014 ShowStopper
EquipmentJohn Deere Again Wins MAGIE ShowStopper Award
August 25, 2014
For the second consecutive year, John Deere was honored at the Midwest AG Industries Exposition (MAGIE) for its new R4045 sprayer. Read More
ManagementExpert To Discuss Farmland Value, Rent At Farm Science Review
August 18, 2014
While cropland values in Ohio increased in the past two years, they have remained flat in 2014, declining in some cases, according to an Ohio State University agricultural economist. Read More

Latest News

Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
Equipment2014 Farm Science Review Crowd Tops 2013 Show
September 19, 2014
The 52nd annual Ohio State University Farm Science Review welcomed more than 130,000 farmers, industry professionals, FFA students and agricultural enthusiasts during the three-day event. Read More
Seed/BiotechUSDA Approves Enlist Following Rigorous Review
September 18, 2014
Dow AgroSciences now awaits EPA registration of Enlist Duo herbicide, the companion herbicide to the Enlist traits, which is expected in the near future. Read More
BlendersYargus Appoints New Plant Manager
September 18, 2014
Steve Shaffer will direct and coordinate daily operations at the company’s Marshall, IL, manufacturing plant, where the Layco line of material handling equipment is produced. Read More
CropLife 100Pinnacle Acquires Kansas-Based Cedar Ridge Supply
September 16, 2014
Cedar Ridge Supply will operate as part of Pinnacle's Performance Agriculture brand. Read More
StewardshipSecretary Vilsack Highlights Innovative Conservation Ef…
September 15, 2014
Nearly $16 million in Conservation Innovation Grants (CIGs) will be awarded to 47 organizations to help develop cutting-edge ideas to accelerate innovation in private lands conservation. Read More
Seed/BiotechSyngenta Responds To Cargill Lawsuit
September 15, 2014
Syngenta believes that the lawsuit is without merit and strongly upholds the right of growers to have access to approved new technologies. Read More
Equipment2014 Farm Science Review Launches Mobile App
September 15, 2014
Smartphone and tablet users planning on attending the 2014 Farm Science Review can now download this year’s customized mobile application. Read More
CropLife 100Southern States Coop Grower Sets Georgia Soybean Yield …
September 15, 2014
Georgia farmer Randy Dowdy's soybeans yielded an astonishing 110.66 bushels per acre, crushing the previous record of 82 bushels-per-acre. Read More
NIMITZ Treated vs Untreated pepper plant
InsecticidesNIMITZ Nematicide Approved By EPA
September 12, 2014
NIMITZ is a novel, non-fumigant nematicide with simplified application features, user safety and an active ingredient with a unique mode of action. Read More
InsecticidesMarrone Bio Innovations Receives Patent For Chromobacte…
September 11, 2014
The patent is the first step for MBI in developing a commercially viable product to inhibit infestations of corn rootworm larvae across America and other regions. Read More
HerbicidesDow AgroSciences: Keeping The Pipeline Stocked
September 11, 2014
Dow AgroSciences is embracing product diversity to drive the company’s future. Read More
CropLife 100CHS Is Official Partner Of New St. Paul Ballpark
September 10, 2014
The new ballpark in St. Paul, MN, officially became CHS Field with Twin Cities-based CHS Inc. revealed as the naming rights partner. Read More
EquipmentHagie Honors Farming Stewardship Leaders
September 10, 2014
The Iowa Farm Environmental Leader award recognizes Iowa farmers as environmental leaders that are committed to healthy soils and improved water quality. Read More
Precision AgPlantBeat: Your Plants’ Pulse In The Palm Of Your Han…
September 10, 2014
A new agronomic monitoring and recommendation service from Phytech could rewrite the book on real-time plant health status monitoring. Read More
StewardshipCCAs Making Headway With 4R Program In Lake Erie Wester…
September 9, 2014
Certified Crop Advisers are implementing the 4R Nutrient Stewardship Certification program in Lake Erie's Western Basin to improve water quality. Read More
MicronutrientsMicronutrients Going Macro
September 9, 2014
Between 2014’s fantastic growing conditions and a heightened awareness on plant nutrition, the major players in micronutrients are gearing up for another big year. Read More
Crop InputsFMC Announces Cheminova Takeover
September 8, 2014
FMC Corporation today announced that it has signed a definitive agreement to acquire Cheminova, a wholly owned subsidiary of Auriga Industries. Read More