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
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
Top 100 Articles
CropLife 100The Andersons Acquires South Dakota Plant Nutrient Manufacturer Kay-Flo
May 20, 2015
The Andersons, Inc., ranked No. 22 on the CropLife 100, has purchased Kay Flo Industries of North Sioux City, SD. “This Read More
CropLife 100North Central Farmers Elevator, Wheat Growers Unification Approved By Board, Still Awaits Member Approval
May 13, 2015
The Boards of Directors for North Central Farmers Elevator (NCFE) and Wheat Growers (WG) have voted to approve the Unification Read More
CropLife 100AgGateway’s Barcoding Initiative Progressing Nicely
May 8, 2015
According to legend (or Wikipedia), the first step towards modern bar codes came back in 1948, when Bernard Silver, a Read More
CropLife 100Pinnacle Agriculture Acquires Minnesota Retailer
April 14, 2015
Pinnacle Agriculture Holdings, LLC, ranked No. 6 on the CropLife 100,  has successfully acquired Liebl Ag, LLC in Ada, MN.  Read More
CropLife 100CHS, Aurora Cooperative Complete Fertilizer Storage, Grain Shuttle Loading Facility
April 13, 2015
CHS Inc., the nation’s leading cooperative and ranked No. 5 on the CropLife 100, and Aurora Cooperative (ranked No. 21) Read More
CropLife 100GROWMARK Acquires Missouri Refined Fuels Terminal
April 2, 2015
Bloomington, IL-based GROWMARK and Magellan Pipeline Co. have entered into an agreement in which GROWMARK will acquire the refined fuels Read More
Latest News
Waterhemp in soybean stubble
HerbicidesEPA Signs Off On Monsanto’s Warrant Ultra Premix
May 27, 2015
Soybean and cotton growers looking for new tools to manage weeds will have a new, first-of-its-kind option in 2016 with Read More
Palmer pigweed seedhead in cotton
HerbicidesSTUDY: Weed Diversity Primarily Influenced By Geography
May 27, 2015
The potential long-term impacts of glyphosate-resistant crops on biodiversity of the agricultural landscape have been the subject of controversy. A Read More
Seed/BiotechAgrilead Forms Distribution Alliance With Kansas-Based …
May 27, 2015
Agrilead, Inc. announces the formation of a strategic alliance with KALO, Inc. of Overland Park, KS. Through the alliance, KALO Read More
EquipmentPrecision Tank Announces A&B Welding Acquisition
May 27, 2015
Precision Tank, a specialized tank and equipment manufacturer, announced today the acquisition of A&B Welding of Thompson, IA, a manufacturer Read More
Allied Cooperative Grain Plant
ManagementTraining Program Gives First Responders Skills For Grai…
May 27, 2015
When stored grain forms hard bridges, columns and other irregularities, those working to correct it find themselves at risk of Read More
Industry NewsBASF Sponsors Space Farming Research Project
May 26, 2015
Is it possible to produce large quantities of high quality vegetables on a space station, about 320 kilometers away from Read More
FertilizerTexas Ammonium Nitrate Bill Passes Senate, Heads To Gov…
May 26, 2015
The Texas State Senate gave final approval last Thursday to new regulations for ammonium nitrate, reports The Dallas Morning News Read More
Young corn plants
Industry NewsArysta Europe Details New Organizational Structure
May 26, 2015
Arysta LifeScience Europe recently announced a new organizational structure to leverage its scale and accelerate the company’s growth in this Read More
Syngenta Sign
Eric SfiligojMonsanto-Syngenta Could Hinge On A Judgment Of Solomon …
May 26, 2015
In the bible, the reputation of King Solomon’s wisdom in matters of despite comes from a tale of one child Read More
ManagementA New Sprayer Company & UAV Research In The Spotlig…
May 21, 2015
CropLife’s Paul Schrimpf and Eric Sfiligoj talk about a Dutch sprayer manufacturer entering the U.S. with a super-sized entry and Read More
HerbicidesFirst U.S. Sale Of Enlist Duo Herbicide Made By Dow Agr…
May 21, 2015
Dow AgroSciences has recorded the first U.S. sale of Enlist Duo herbicide with Colex-D Technology. This marks the first commercial Read More
CropLife 100The Andersons Acquires South Dakota Plant Nutrient Manu…
May 20, 2015
The Andersons, Inc., ranked No. 22 on the CropLife 100, has purchased Kay Flo Industries of North Sioux City, SD. “This Read More
EquipmentNORAC Options Coming To TerraGator
May 19, 2015
Utilizing NORAC’s Standard Control technology, boom height control is now available for TerraGators with Airmax Precision 2 and Benson Booms. This Read More
Crop InputsHelena Introduces New Soil Health Product
May 19, 2015
Helena Chemical Co. is helping agricultural producers maximize yields and efficiency with the introduction of Liquid Chisel, a new product Read More
Stewardship4R Nutrient Management Planning Certification Now Avail…
May 19, 2015
The American Society of Agronomy (ASA) and the International Certified Crop Adviser (ICCA) program announce a new specialty certification in Read More
Environmental Defense Fund logo
Paul SchrimpfEnvironmental Defense Fund: Appreciating Partners
May 19, 2015
I WAS deep in the throes of preparation for the Commodity Classic meeting that took place this past February, trying Read More
WebinarsUpcoming Webinars
May 19, 2015
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
Syngenta Sign
Seed/BiotechSyngenta Responds To Lawyer’s Victory Claim In Vi…
May 18, 2015
A plaintiff’s lawyer has issued a public statement claiming that damages have been awarded in the Agrisure Viptera corn lawsuits Read More