Going Down

As any mountain climber will tell you, there’s only one direction to move once you’ve reached the top — down. In 2008, many market analysts predict that the fertilizer industry will experience just such a return-to-Earth kind of year.

In many ways, 2007 was an unprecedented year in the annals of crop inputs. Although market insiders anticipated that growers chasing the ethanol boom would plant more corn than in 2006, early forecasters thought 83 million acres would be the target number. In reality, growers planted more than 93 million acres.

As the most intensive fertilizer crop, this much more corn translated into some incredibly huge numbers for fertilizer across the board — both in terms of dollars generated and demand. In fact, according to data collected in our annual CropLife 100 survey of ag retailers, fertilizer sales in 2007 topped $6.7 billion, an increase of 13.6% compared with the figures from the 2006 survey. At 46%, fertilizer now accounts for almost half of all crop input sales among CropLife 100 dealerships.

On the demand side of things, nitrogen-based (N) fertilizers remained the largest beneficiary of the increase in planted corn acres. In 2007, says Andrew Prince, principal consultant, nitrogen for British Sulphur Consultants, demand for N products grew 3.5%, from 11.3 million tons to 11.7 million tons. Of this total, 5.6 million tons ended up being used on corn, with wheat usage a distant second at 1.5 million tons. On a state-by-state basis, Iowa led the nation, using 1 million tons of N, with Illinois a close second at 0.9 million tons. Rounding out the top five states in N usage were California, Texas, and Nebraska at 0.7 million tons each.

Not surprisingly, a large percentage of N products being used in the U.S. came from foreign markets. In 2007, says Prince, 70% of solid urea (46% N) was imported into this country (5.6 million tons), along with 45% of ammonia (7.6 million tons), and 29% of ammonium nitrate (1 million tons). Overall, 57% of N fertilizers used in the U.S. came from foreign markets, a slight decline of 2% from the 2006 totals.

Regarding the outlook for 2008, Prince believes corn acreage will decline 5.6 million acres to 88 million acres. “As a result, N consumption for corn will drop by 0.3 million tons,” he says. “However, wheat acreage is expected to rise by 4.4 million acres on the back of rising prices. N consumption for wheat will rise by 0.1 million tons.”

As a by-product of these crop mix changes, overall N fertilizer consumption in 2008 is predicted to decline 0.3 million tons to 11.4 million tons. Expected to increase, however, are N prices. For example, early market forecasts have the price for anhydrous ammonia increasing 20% this year to approximately $500 per ton.

A Big Comeback

If there was a comeback kid among the three macronutrients in 2007, it was phosphate (P). From a high-water mark of 4.8 million tons used in 2004, P consumption has dropped steadily the past two seasons. In 2006, only 4.4 million tons of P were applied by U.S. growers — the lowest total since 2003.

But this all changed in 2007. Accord­ing to Michael Rahm, vice president of market analysis and strategic planning for The Mosaic Co., the nation’s P usage increased 9% to 4.8 million tons. “This increase was due to the large increase in corn acreage and a recovery in application rates,” says Rahm.

Unfortunately, this increase isn’t expected to carry over into 2008, he adds. “U.S. demand is forecast to stay flat in 2007/08 due to a switch in acreage from corn to soybeans and wheat, and remain stable to slightly higher application rates,” says Rahm.

As for the final macronutrient, potash (K), 2007 was also a great year. According to Rahm, U.S. consumption increased from 5.6 million tons in 2006 to 6.8 million tons in 2007. Again, as with N and P consumption, more corn acreage coupled with overall higher crop prices convinced many growers to invest in more K to help boost their crop yields.

In the coming year, K consumption is expected to follow a similar path as N in terms of usage. According to Harry Vroomen, vice president of economic services for The Fertilizer Institute, K consumption is expected to fall to approximately 6 million tons in 2008. “All nutrient markets will be tight until 2009 as demand has expanded more rapidly than was expected a few years ago,” says Vroomen. “Because of a shift towards more balanced fertilizer use, no significant K surplus will develop before 2011 at the earliest.”

Leave a Reply

Fertilizer Stories

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
FertilizerOSHA Hammers West Fertilizer With Over $100K In Fines For April Explosion
October 10, 2013
The Occupational Safety and Health Administration is fining the parent company of the West Fertilizer plant, Adair Grain Inc., $118,300 for 24 violations. Read More
FertilizerTFI Appeals Chesapeake Bay TMDL Ruling
October 10, 2013
The Fertilizer Institute joined a coalition appealing a U.S. District Court ruling on the Chesapeake Bay Total Maximum Daily Load (TMDL) for nitrogen and phosphorus. Read More

Trending Articles

Green Valley Ag facility
Retail FacilitiesGreen Valley Ag Adopts A.J. Sackett’s Precision Fertilizer Blending® Technology At New Facility
July 8, 2014
Sackett's Precision Fertilizer Blending® Technology is making huge strides around the world. Green Valley Ag adopts the technology at its new facility to support its advancing agronomic needs. Read More
Retail FacilitiesWaconia Manufacturing Builds Facility Designed For Speed, Efficiency
July 7, 2014
To make its new hub facility more efficient, Cooperative Elevator enlisted the aid of Waconia Manufacturing. Read More
EquipmentSummer Show Preview 2014: Superior Sprayers Take The Field
July 3, 2014
In this final installment of our coverage of the major categories of Big IRON that retailers can expect to test-drive at this summer’s events, here is a look at 19 sprayers. Read More
Scouting a soybean patch at Green Valley Ag.
EmployeesCropLife Compensation Survey: Battling Talent Drain
July 2, 2014
Retailers too often lose employees to companies outside of agriculture, while recruiting efforts are most often limited to competitors and other ag-focused organizations. Read More
HerbicidesDow AgroSciences Introduces SureStart II Herbicide
June 16, 2014
The enhanced formulation has improved viscosity and increased stability under heat and controls more than 60 high-anxiety grasses and broadleaf weeds found in corn fields. Read More
HerbicidesBASF Investing $270 Million To Expand U.S. Herbicide Production
June 11, 2014
BASF has invested more than $270 million to expand herbicide production capacities in the U.S., including more than 20 new products to be launched over next two years. Read More

Latest News

StewardshipMonsanto Joins Panel Of Innovators To Advance Research …
July 30, 2014
Monsanto Co. and The Climate Corp., its division, recently joined a roundtable of experts at the White House to share ideas and research approaches to help the world’s farmers manage and adapt to the impact of climate change on the global food supply. Read More
Crop InputsSoybean Checkoff Produces Big ROI
July 30, 2014
Under the soy checkoff program, all U.S. soybean farmers contribute a small percentage of their gross soybean sales for research and marketing projects that maximize their profit potential. Read More
CropLife 100Learfield Sports, CHS Agree To Football-Centric, Colleg…
July 30, 2014
CHS Inc. will embark on a highly integrated collegiate sports sponsorship platform with 24 Division I universities in 19 states designed to reach the farmer-owned cooperative's rural owners and customers. Read More
LegislationUSDA Implements Key Farm Bill Crop Insurance Provision
July 30, 2014
The new Supplemental Coverage Option, available through the federal crop insurance program and set to begin with the 2015 crop year, is designed to help protect producers from yield and market volatility. Read More
CropLife 100Wilbur-Ellis Forms New Organizational Structure For Its…
July 30, 2014
The new structure will provide more responsive internal support and will allow regional vice presidents and area managers to spend more time with customers, on talent development and on operational excellence across branches. Read More
Palmer pigweed in cotton
HerbicidesNew Training Modules On Herbicide Resistance Now Availa…
July 30, 2014
The Weed Science Society of America has announced the availability of three new education modules on herbicide resistance in weeds. Read More
HerbicidesWillowood To Market Glufosinate
July 28, 2014
Willowood USA recently announced that Federal EPA has approved its technical registration for glufosinate. Read More
InsecticidesHow To Scout For Corn Earworms In Corn
July 28, 2014
In her weekly report, University of Missouri Agronomy Specialist Jill Scheidt discusses what to look for when scouting for corn earworm. Read More
Crop InputsDuPont Pioneer, Weyerhaeuser Enter Technology License A…
July 28, 2014
The agreement brings together agricultural and forestry know-how to sustainably improve crop productivity for corn growers around the world. Read More
EquipmentAGCO Launches Global iPad App
July 28, 2014
The free AGCO Global iPad App can be downloaded from the Apple iTunes Store and features the full family of RoGator self-propelled sprayers and TerraGator high-floatation spreaders. Read More
Eric SfiligojYuma Centennial Ag Supply Earns 2014 National Environme…
July 28, 2014
Colorado-based ag retailer receives top trophy in 24th annual DuPont Crop Protection/CropLife ceremony. Read More
CropLife 100Pinnacle Forms Alliance With Wildlife Managment, Seed O…
July 25, 2014
The strategic alliance will provide Tecomate with key wildlife products, processing facilities, distribution centers and sales through Pinnacle’s ever-growing retail network. Read More
ManagementFranken Presses White House On RFS Support
July 25, 2014
Al Franken and a group of Senate democrats recently met with senior White House official John Podesta to urge the administration to change its position on an EPA proposal. Read More
ManagementASA, FarmLink To Launch ‘Operation Benchmark̵…
July 25, 2014
The American Soybean Association (ASA) and FarmLink are teaming up to help farmers close the $11 billion gap between what they harvested in 2013 and what they could harvest annually. Read More
StewardshipNorthey: Farmers Commit $1.4 Million to Try New Water Q…
July 25, 2014
The practices that are eligible for funding include cover crops, no-till or strip till and using a nitrification inhibitor when applying fall fertilizer. Read More
Precision AgFarmers Learn How Changing World Will Impact Iowa
July 24, 2014
Technology and understanding global consumer demand for Iowa farm products brought hundreds of farmers and agribusiness leaders to Ames recently for the annual Iowa Farm Bureau Federation Economic Summit. Read More
HerbicidesPurdue: Late Season Weeds May Require Manual Removal
July 24, 2014
Hand-rouging and pulling late season weeds by hand may be the best way to remove them, more so than using a herbicide, a Purdue Extension weed scientist says. Read More
Soybean Field
InsecticidesTransform WG, Closer SC Insecticides Receive R&D 10…
July 23, 2014
Dow AgroSciences has received the award from R&D Magazine for Transform WG insecticide and Closer SC insecticide with Isoclast active. Read More