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?
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

FertilizerYara Tampa Ammonia Terminal Garners ResponsibleAg Honors
November 25, 2015
Yara has received its first ResponsibleAg Certification for its Tampa, FL, Ammonia terminal location. This achievement demonstrates Yara’s commitment to Read More
Tiger Sul Crop Nutrient Calculator
FertilizerH.J. Baker Launches New Nutrient Calculator App
November 12, 2015
H.J. Baker, a global agriculture firm, has launched a new agronomic nutrient calculator app. This innovative and powerful tool will Read More
FertilizerH.J. Baker Hosting Chinese Delegation
November 12, 2015
International Agricultural firm, H.J. Baker, is hosting a delegation from Beijing Xinhefeng Agrochemicals Co., Ltd. (XHF), a leading distributor of Read More
corn field
FertilizerWest Central Distribution Launches Levesol DFC
November 5, 2015
Levesol DFC, a dry fertilizer compatible version, joins the original Levesol as another option for growers to maximize the potential Read More
Top 100 Articles
CropLife 100United Cooperative Acquires Four ADM Wisconsin Facilities
November 12, 2015
United Cooperative, based out of Beaver Dam, WI, recently acquired four grain and agronomy locations from Archer Daniels Midland (ADM) Read More
CropLife 100BRANDT Car Makes NASCAR Xfinity Series
October 29, 2015
BRANDT will join JR Motorsports with driver, Justin Allgaier, for the 2016 NASCAR Xfinity (NXS) Series season. Allgaier will pilot Read More
CHS Building exterior
CropLife 100CHS Leaders Help Shape Succession Report
October 22, 2015
Succession planning was listed as a main concern of cooperative leaders at this summer’s 15 regional CHS owner town hall Read More
Fall Harvest
CropLife 100Pinnacle Purchases Eight Regional Seed Companies
October 12, 2015
Pinnacle Agriculture Holdings has announced the purchase of eight regional seed companies to advance its seed business. Pinnacle has acquired: Read More
MRM Agricultural Service
CropLife 100Pinnacle Acquires CropLife 100 Ag Retailer
October 8, 2015
Pinnacle Agriculture Holdings, LLC has successfully acquired the Missouri-based agronomy business of MRM Agricultural Service, LLC and its affiliates (MRM). Operating Read More
Eric Jenks, Wilbur-Ellis
CropLife 100Wilbur-Ellis Opens Dry Fertilizer Storage And Blending Facility In Washington
October 8, 2015
Wilbur-Ellis Co., ranked No. 4 on the CropLife 100, has constructed and opened a 22,000-ton dry fertilizer storage and blending Read More
Latest News
HerbicidesBREAKING: EPA Pulls Registration On Dow’s Enlist …
November 25, 2015
EPA on Wednesday withdrew approval of a controversial new weed killer to be used on genetically modified corn and soybeans, Read More
FertilizerYara Tampa Ammonia Terminal Garners ResponsibleAg Honor…
November 25, 2015
Yara has received its first ResponsibleAg Certification for its Tampa, FL, Ammonia terminal location. This achievement demonstrates Yara’s commitment to Read More
ManagementReviewing The Top Ag Stories For 2015
November 24, 2015
Editors Eric Sfiligoj and Paul Schrimpf discuss the most noteworthy events from this past year in agriculture. Read More
EmployeesAgriculture Jobs May Be Plentiful, But New Grads Are Sc…
November 24, 2015
Close to 60,000 jobs are set to open up in agriculture each year for the next five years, but there's not enough grads to fill them. Read More
Radish cover crop
StewardshipCover Crops Guide Helps Growers Improve Water Quality
November 23, 2015
A publication that teaches growers the advantages of using cover crops to improve soil health and crop yields has won Read More
Crop InputsThe Andersons’ Products Receive California Organi…
November 23, 2015
The Plant Nutrient Group of The Andersons, Inc. announced today that its Humic DG and Black Gypsum DG products are Read More
Eric SfiligojNew European Study Seems To Support Glyphosate Safety
November 23, 2015
Looking at any international news over the past few years, it might seem as if the European Union (EU) is Read More
Toggle Biostimulant corn roots
Crop InputsTwo New Biostimulants Added To United Suppliers’ …
November 20, 2015
Winfield US announces the launch of two new products in the United Suppliers portfolio for the 2016 crop season, Optify Read More
StewardshipNRDC Report: Cover Crops Contain Vast Benefits
November 19, 2015
As harvest season ends and farmers in the United States ready themselves for winter, one small change could make a Read More
Fall Harvest
Seed/BiotechArysta Launches New Seed Protectant
November 19, 2015
As spring wheat growers begin planning for a strong start to their season, Arysta LifeScience North America announces RANCONA V Read More
Crop InputsInocucor Receives U.S. Patent For Microbials
November 19, 2015
Inocucor Technologies Inc., the Montreal-based agriculture biotech company, was issued patent No. 9,175,258 by the U.S. Patent and Trademark Office to protect Read More
ManagementSyngenta Rumors and ARA 2015 Preview
November 19, 2015
CropLife Editor Eric Sfiligoj looks at the latest rumors involving Syngenta selling its crop protection business and talks about events Read More
EquipmentAGCO Announces Finalists For Operator Of The Year Honor
November 19, 2015
AGCO Corp. has announced the four top operators chosen as finalists for AGCO’s 10th Annual Operator of the Year program, Read More
High Plains Aquifer
StewardshipStudy: High Plains Aquifer Overall Usage In Decline
November 18, 2015
A new Kansas State University study finds that the over-tapping of the High Plains Aquifer’s groundwater beyond the aquifer’s recharge Read More
Golden Harvest Corn healthy leaves
FungicidesArysta Launches New Corn And Soybean Fungicide
November 17, 2015
Arysta LifeScience North America has recently launched ZOLERA FX Fungicide. The highly systemic, powerful fungicide delivers broad-spectrum disease control with Read More
Young corn plants in soil
Crop InputsBioAg Alliance: Microbials Targeted For 250-500 million…
November 17, 2015
Monsanto and Novozymes have announced a new 2025 acreage target that will guide the companies’ microbials business for the next Read More
Syngenta Sign
Crop InputsSyngenta Still Being Eyed For China Takeover
November 16, 2015
China National Chemical Corp. approached sovereign wealth funds including China Investment Corp. to help pay for a potential acquisition of Read More
Cedar Country Cooperative
Eric SfiligojCooperative Consolidation Continues
November 16, 2015
As I put this enewsletter column together, we’ve just put the finishing touches on our magazine’s annual CropLife 100 report. Read More