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 InputsDuPont Pioneer: Corn Belt P and K Levels Lagging
August 24, 2016
A new DuPont Pioneer study conducted across 12 Corn Belt states demonstrates that growers may be leaving profit potential in Read More
Tissue testing
FertilizerMosaic: 6 Tips For Better Crop Nutrition In Corn
August 16, 2016
Late in the crop season is a good time to assess visual nutrient deficiencies and ensure early- and mid-season deficiencies Read More
Soil
FertilizerSoil Health Experts Gain Ground On Standardized Measurements
August 11, 2016
Soil health experts from across North America plan to integrate more research projects to provide agricultural producers and policy makers Read More
Fertilizer5 Steps For Identifying Nutrient Deficiencies This Summer
August 8, 2016
As the summer growing season unfolds, the quest for ways to protect emerging crops is top of mind for many Read More
Trending Articles
Key Cooperative Marcus Construction Steel Building
Retail FacilitiesMarcus Construction Builds High-Speed Agronomy Center For Key Cooperative
July 7, 2016
Key Cooperative in Grinnell, IA, wanted a state-of-the-art Agronomy Center to better serve its customers. Marcus Construction delivered exactly that. Read More
Heritage Cooperative
Retail FacilitiesKahler Automation Designs State-Of-The-Art Facility For Heritage Cooperative
July 4, 2016
Heritage Cooperative in Marysville, OH, needed an efficient liquid, dry and grain facility to serve the many needs of their Read More
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stewardship Certification Program
June 27, 2016
The 4R Nutrient Stewardship Certification Program has announced that The Andersons, Inc.’s Waterloo, IN, facility has been added to its Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To Explore IT Solutions
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
Monsanto Luling Plant
Eric SfiligojWhat’s Next For Monsanto?
May 31, 2016
For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May 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
Latest News
Crop InputsDuPont Pioneer: Corn Belt P and K Levels Lagging
August 24, 2016
A new DuPont Pioneer study conducted across 12 Corn Belt states demonstrates that growers may be leaving profit potential in Read More
Monsanto sign
Crop InputsCould a Monsanto-Bayer Union Be 2 Weeks from Fruition?
August 24, 2016
Via STLToday.com (The St. Louis Post-Dispatch): Merger talks between Monsanto Co. and Bayer AG are advancing after a series of Read More
EquipmentCase IH Debuts Nutri-Tiller 955 Strip-Till Applicator
August 24, 2016
With strip-till continuing to expand across new acres, Case IH designed the new Nutri-Tiller 955 strip-till applicator to help producers Read More
EquipmentCase Launches Aim Command FLEX, 25th Anniversary Patrio…
August 24, 2016
Case IH announces new AIM Command FLEX advanced spray technology for greater application accuracy, as well as special 25th Anniversary Read More
ASMARK 2016 Retailers Live! Tour - CPS
CropLife 100CPS Acquires Texas Retail Operation
August 23, 2016
Crop Production Services (CPS) has acquired the assets of Larry’s Chemical and Spray, Inc., for an undisclosed amount in an Read More
PrecisionAg Video Conference
Precision AgVideo: PrecisionAg Vision Conference
August 22, 2016
A Strategic Conference Focused on the Future of Farm Digitization and Precision Agriculture Visit precisionagvision.com and register today! Read More
Young Corn Plants
Industry NewsOABA Welcomes Nicole Wallace As Communication & Adm…
August 22, 2016
The Ohio AgriBusiness Association has hired Nicole Wallace as its communication and administrative coordinator. Wallace will help provide comprehensive communication Read More
Syngenta Sign
Crop InputsChemChina, Syngenta Receive Clearance From CFIUS
August 22, 2016
China National Chemical Corp. (ChemChina) and Syngenta have announced that the companies have received clearance on their proposed transaction from the Read More
ManagementAg Industry Shows and Rumors
August 18, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about the upcoming trade show schedule, crop protection merger updates, and content for Read More
MAGIE 2015
EquipmentMAGIE Takes The Pulse Of The Ag Retail Industry
August 18, 2016
Every year, one of the major highlights of my career as an ag journalist is attending the Midwest AG Industries Read More
MAGIE 2015 Overview
EquipmentPride In Professionalism On Display At MAGIE
August 18, 2016
The Illinois Fertilizer & Chemical Association (IFCA) is proud to partner with CropLife IRON and continue the tradition of bringing Read More
SprayersJenner Ag To Debut 25th Anniversary Edition Case IH Pat…
August 18, 2016
Visitors at the 2016 Midwest Ag Industries Exhibition (MAGIE) in Bloomington, IL, will have a unique photo opportunity, as Jenner Read More
Crop InputsEU Glyphosate Controversy Heating Up Yet Again
August 17, 2016
The battle over glyphosate rages on in Europe, creating a lot of question marks over whether the herbicide will continue Read More
Industry NewsNew Partnership Provides Improved Representation At Ohi…
August 16, 2016
The Ohio AgriBusiness Association (OABA) has retained Belinda Jones of Capitol Consulting Group, Inc. (CCG) for government relations work in Read More
Tissue testing
FertilizerMosaic: 6 Tips For Better Crop Nutrition In Corn
August 16, 2016
Late in the crop season is a good time to assess visual nutrient deficiencies and ensure early- and mid-season deficiencies Read More
WebinarsWebinar Schedule
August 14, 2016
Register for one of our upcoming Webinars or access our archive of past Webinars to view recordings of presentations that may be of interest to you. Read More
Dow DuPont
Crop InputsDowDuPont Update: EU Takes Closer Look at Merger
August 12, 2016
Dow Chemical Co. and DuPont Co. face months of haggling with European Union antitrust regulators who opened an in-depth probe Read More
ManagementNews from InfoAg 2016 and Weed Wands
August 11, 2016
Editors Paul Schrimpf and Eric Sfiligoj review what happened at last week’s big Precision Ag event and a possible solution Read More