Fertilizer: Poised To Grow

Fertilizer Pile

Based upon the available data, fertilizer will follow-up its strong performance in 2010 with an equally impressive one in 2011. Even using the most conservative crop nutrients projections as a base, U.S. fertilizer demand should reach 22.8 million metric tons in 2011, an increase of 22% compared with the 2010 total of 18.7 million metric tons. Coupled with the 18% growth rate experienced by the marketplace between 2009 and 2010, this would mark a new high-water mark for fertilizer consumption in America, topping the 22.5 million metric tons used by grower-customers during 2007.

“U.S. fertilizer use will be up in 2011,” said Tom Blue, president of Blue, Johnson & Associates, Inc., speaking at the annual The Fertilizer Institute‘s Fertilizer Outlook & Technology Conference in November. “All fertilizer prices are up, significantly correlated to crop prices.”

Even on the global stage, fertilizer futures look positive. According to its annual Fertilizer Outlook 2010-14 report, the International Fertilizer Industry Association is projecting a steady recovery from the worldwide economic downturn that plagued the marketplace during 2009. “With the progressive economic recovery and a return to more favorable and stable agricultural market conditions, world fertilizer demand in 2010-11 is forecast to increase by 4.8% to 170.4 million metric tons,” said the report. “The bulk of the increase in demand would come from Asia, and to a lesser extent, from the Americas.”

In the U.S., part of this growth is expected to come as a result of the crop mix. If early projections are correct, America’s growers will plant 88.2 million acres of corn in 2011 (up 3% from 2010), 77.7 million acres of soybean, 11 million acres of cotton and 53.6 million acres of wheat.

N-Chanted Numbers

With the expected rise in corn acreage as a boost, Blue is forecasting nitrogen (N) demand in 2011 will top 12.9 million metric tons, an increase of 9.3% from the 2010 total. This would also represent a new high in N demand for the marketplace, topping the 2007 total by 100,000 tons.

Making this projection seem even more solid is the current pricing in natural gas. According to Mercator Energy, natural gas prices are presently under $5 per British thermal unit, down more than $10 in the past five years. This is due to the abundance of shale-recovered natural gas now being supplied to the market, which is expected to keep prices stable for the foreseeable future.

“Most experts project flat gas prices for the next five years,” said Mercator Energy President John Harpole. “In 20 years, we have never seen flat gas prices.”

Phosphate (P) is also expected to benefit from the increase in corn acreage, since 49% of all P used for crop growth in the U.S. goes to corn (see graph). In 2011, P demand is projected to climb 53% to 4.6 million metric tons, tying the demand highs achieved by P in 2005 and 2007. “There is currently strong phosphate demand in all major markets,” concluded Kelly Davey, manager, market research for Potash Corp. of Saskatchewan.

This is a pleasant surprise considering much of the talk during late 2010 focused on potential shortages of P materials going into 2011. However, according to a new report entitled World Phosphate Rock and Resources from the International Center for Soil Fertility and Agricultural Development, there are sufficient global phosphate rock resources to produce phosphate rock concentrate, phosphoric acid, phosphate fertilizers and other phosphate-based products for several hundred years. “Reserves and resources of key rock-phosphate producing countries were assessed using a variety of available information sources,” said Dr. Terry Roberts, president of the International Plant Nutrition Institute, explaining the report’s contents. “The new study estimates global reserves at about 60 billion metric tons, which is about four times higher than current, but outdated, estimates of the U.S. Geological Survey.” Furthermore, the report speculates that peak phosphate rock production won’t be reached until 2033 or 2034.

Meanwhile, potash (K) demand should also hit new highs in 2011. According to projections, K volume should hit 5.3 million metric tons in 2011, up 36% from 2010. This would beat the previous high water mark for K demand of 5.2 million metric tons, set in 2005.

“Potash demand drivers are strong,” said Dr. Michael Rahm, vice president, market and strategic analysis for The Mosaic Co. “There are high agricultural commodity prices, solid underlying agricultural fundamentals and positive farm economics/income worldwide.”

Still, there are a few concerns for K going forward. “If there is a concern, it was the fact that producers struggled to keep up with peak shipments this fall and the market is expected to remain tight until new capacity comes online later this decade,” added Rahm.

Blue concurred, adding N and P supply/demand into the equation as well. “With corn harvest occurring relatively early in 2010, demand for P, K and ammonia for fall application had been pretty strong,” he said. “Regarding P and K, though, the uncertainty becomes this: If a lot went down in the fall, what degree will that impinge on spring demand?”

New Order Taking

However, even with this bit of uncertainty, Blue said that the fertilizer industry is better positioned to weather an unexpected market downturn compared with prior years. “Lessons were actually learned in 2007-08-09,” he said. “Major suppliers appear to be sticking with a strategy of supplying/taking orders for one or two months only at a given price. So, in a scenario where crop prices, especially corn, keep ramping up, suppliers will have not ‘oversold’ at current prices. Or, if crop prices seriously retreat for some reason, suppliers have the option to drop prices so as to continue to move product.”

Given these factors, Blue is optimistic that fertilizer demand will enjoy a fruitful 2011. “In absolute terms, we see no basic, inherent shortage of N, P and K supply capacity for both the domestic and international market,” he said. “The principle issues are, as always, supply at what price and is it/will it be in the right place at the right time?”

Leave a Reply

Fertilizer Stories

Iowa waterways
FertilizerDow AgroSciences Recognizes Ag Retailers’ Role in Protecting Iowa Water Quality
April 6, 2017
The state of Iowa and its agriculture community have worked for decades to preserve soil health, protect water quality and Read More
Yara West Sacramento Ribbon Cutting
Crop InputsYara West Sacramento Is Newest Addition
March 27, 2017
Yara’s West Sacramento Terminal was officially welcomed March 21 as the newest Yara North America facility in the U.S. While continually Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teaching Fertilizer Education
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
Growing corn
Crop InputsLock Down Nitrogen For 2017 Profits
March 5, 2017
Managing nutrient programs to snuff out the three types of nitrogen loss — leaching, volatilization, and denitrification — is crucial Read More
Trending Articles
Young Corn Plants
Crop NutritionStill Hunting Yields
April 1, 2017
There’s no denying it — the agricultural marketplace today is undergoing a fundamental shift in fortunes. Not too many years Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teaching Fertilizer Education
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
AdjuvantsA New Weed-Control Era Begins: But First, One Last Obstacle
March 4, 2017
There is trepidation, there is reluctance, and there is excitement. Ag retailers feel it all about the new dicamba and Read More
LIFT Academy video screenshot
Crop InputsLIFT Agriculture Academy: A Q&A With West Central Distribution’s Dean Hendrickson
March 1, 2017
West Central Distribution recently launched its LIFT Agriculture Academy, a new, premiere training and professional development resource for West Central’s ag Read More
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
Latest News
ManagementAn Inside Look at Award Winning Ag Retailer Gar Tooteli…
April 20, 2017
CropLife Editor Eric Sfiligoj discusses An Inside Look at Award Winning Ag Retailer Gar Tootelian Read More
Students Soybean Field
Industry NewsMACA Announces 2017 Young Leader Scholarship Recipients
April 19, 2017
The Mid America CropLife Association (MACA) Board of Directors selected 11 college students to receive the MACA Young Leader Scholarship Read More
Growmark FS Outlet
SoftwareKnoa Software Solution Helps GROWMARK Boost System Perf…
April 19, 2017
Knoa Software, a leading provider of user experience management (UEM) software, has announced that GROWMARK, Inc., a regional agricultural cooperative Read More
Crop InputsFBN Publishes ‘Voice of the Farmer’ Agricul…
April 17, 2017
Farmer’s Business Network (FBN) released today its “The Voice of the Farmer”, which the company is describing as “a special Read More
ManagementTalking Responsible Ag
April 13, 2017
CropLife Editor Eric Sfiligoj discusses the Responsible Ag program with director Bill Qualls. Read More
Crop InputsFlying Under the Radar No More, FMC Goes Big
April 13, 2017
Describing FMC as “under the radar,” admittedly, is probably a stretch. But in a snap of the fingers, FMC upped Read More
Crop InputsWhat do Roundup and Mickey Mouse Have in Common? Califo…
April 13, 2017
(SOURCE: East Valley Times) Glyphosate, the active ingredient in Monsanto Co.’s Roundup and many other weed killers, is being added Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSource: ChemChina to Divest Assets to Adama Following S…
April 11, 2017
China National Chemical Corp. plans to redistribute agrochemical assets to its Adama unit after the $43 billion takeover of Syngenta Read More
Farming drone air
Eric SfiligojThe Interest in UAVs for Agriculture Grows
April 10, 2017
At times, it seems as if experts have been predicting “big things” for unmanned aerial vehicles (UAVs) for several years Read More
OpinionOpinion: Taking On The Farmers Business Network
April 8, 2017
Well, another round of venture capital funding has come to Farmers Business Network (FBN), followed up with the obligatory feature Read More
Drone
EquipmentFarming Drones: The Future Of Agriculture?
April 7, 2017
Chances are, you already know drones are amazing. After all, this is something DroneLife readers just understand. But if you’re Read More
ManagementFMC-DuPont, Crop Plantings, and UAV Updates
April 6, 2017
Editors Eric Sfiligoj and Jackie Pucci discuss the purchase agreement between DuPont and FMC, the 2017 crop acreage mix and Read More
Falcon soil sampler
EquipmentSerious Soil Sampling Rigs
April 6, 2017
The industry has seen an increase in automation in sampling equipment, and consultants now often pull cores with an automated Read More
Iowa waterways
FertilizerDow AgroSciences Recognizes Ag Retailers’ Role in Prote…
April 6, 2017
The state of Iowa and its agriculture community have worked for decades to preserve soil health, protect water quality and Read More
Farmer Scouting Weeds in Soybean Field
EquipmentSoil, Scouting Programs Continue To Gain Value
April 5, 2017
How much growers and their retailers utilize soil testing and scouting varies greatly. But they should step up their game Read More
Forbes Mixing Bowl NYC
Precision Ag6 Key Takeaways from Forbes Mixing Bowl NYC
April 5, 2017
Advisory investment group The Mixing Bowl teamed up with Forbes for its New York-based event this year to discuss technology’s Read More
Pam Marrone
Crop InputsQ&A With Pam Marrone On The World’s First All-Biolo…
April 4, 2017
Marrone Bio Innovations Inc. and Israel-based Ground­work BioAg in February announced successful field trials of the world’s first all-biological comprehensive Read More
Corn soil
Crop NutritionBiostimulants Clamor For A Piece Of The Row Crop Market
April 3, 2017
The question these days isn’t who is venturing into biostimulants — it’s who isn’t. Or more to the point: The Read More