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

Corn Field
FertilizerPhosphorus: Complex, Inefficient, Essential
July 12, 2016
Submitted by Verdesian Life Sciences Managing phosphorous for optimum plant uptake and increased yield potential is no easy task. “Because of Read More
Hypoxic zone Gulf of Mexico
Fertilizer“Grand Challenge”: $1 Million Prize Offered For Best In-Field Solution To Hypoxia
July 11, 2016
Hypoxic “dead zones” are a continuing problem in areas ranging from Lake Erie to the Gulf of Mexico and beyond, but Read More
Crop InputsExperts Predict 2016 Lake Erie Harmful Algal Bloom ‘Less Severe’ (w/Gallery)
July 8, 2016
As sun-drenched media members and various other dignitaries crowded around the back deck of the docked Bio-Lab – bobbing gently Read More
Dr. Fred Below, University of Illinois pictured presenting at the LIFT Summit
Crop InputsLeaders of In-Furrow Technology Hold Summit At Innovation Plot
July 6, 2016
The Leaders of In-Furrow Technology (LIFT) held a LIFT Summit and field day on June 22-23 to discuss the latest Read More
Trending Articles
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
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Latest News
ManagementGROWMARK Meeting Visit, Company Takeover Updates, and R…
July 22, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent speaking engagement at GROWMARK’s eastern event, crop protection company merger rumors, Read More
Crop InputsMonsanto: EU Approves Roundup Ready 2 Xtend Imports
July 22, 2016
Monsanto Co. announced today that the European Commission has granted import approval for Roundup Ready 2 Xtend soybeans. This milestone Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Announces Alfalfa Seed Split Off
July 22, 2016
On September 1, 2016, Syngenta will transfer sales and distribution of alfalfa seed to the NEXGROW branded business that is Read More
Dow DuPont
Crop InputsDuPont, Dow Shareholders Approve Merger
July 21, 2016
DuPont and The Dow Chemical Company announced that, at their respective special meetings of stockholders held today, stockholders of both Read More
ManagementLand O’Lakes Announces SUSTAIN Business Unit, Oth…
July 20, 2016
Land O’Lakes, Inc. today announced the formal organization of a new business unit, SUSTAIN, and its leadership. SUSTAIN will focus Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Shareholder Proposes Monsanto ‘Host…
July 20, 2016
One of Bayer AG’s top 20 shareholders said Wednesday it may make sense for the life-science company to launch an Read More
Young Corn Closeup
Industry NewsNew Leaf Symbiotics Snags Former Monsanto Microbials Le…
July 20, 2016
NewLeaf Symbiotics, announced today the appointment of Dr. Janne Kerovuo as Vice President for Research and Discovery.  Dr. Kerovuo comes Read More
Corn and ditch
ManagementStudy: Saturated Buffers Reduce Nitrates From Subsurfac…
July 19, 2016
The Agricultural Drainage Management Coalition (ADMC), Agricultural Drainage Management Systems Task Force and Dr. Dan Jaynes with the National Laboratory Read More
Case sprayer nozzle closeup
EquipmentAgronomists, CCAs, Custom Applicators Invited To FSR Ag…
July 19, 2016
Agronomists, Certified Crop Advisers (CCA) and custom applicators can stay current on agronomy issues on the grounds of the Farm Read More
Soybean Field
LegislationOhio Soybean Association Names Brian Hill Legislator Of…
July 19, 2016
The Ohio Soybean Association (OSA) has announced that State Representative Brian Hill (R-Zanesville) has been named one of two Legislators of Read More
Eric SfiligojThe Latest Monsanto Rumors: A Game Of Tones
July 18, 2016
When companies are engaged in the back-and-forth of the acquisition game, the tone of their various announcements is always important. Read More
Nozzle spray close-up
AdjuvantsWest Central Distribution Introduces New Elite Family O…
July 14, 2016
West Central Distribution recently released a new line of Elite adjuvants to work alongside the new herbicide technologies that combat Read More
Bayer sign
Crop InputsBayer Makes New Offer For Monsanto
July 14, 2016
Bayer AG boosted its takeover offer for Monsanto Co. to about $65 billion in a bid to overcome the U.S. Read More
ManagementAn Update on Water
July 14, 2016
CropLife Editors Eric Sfiligoj and Matthew Grassi discuss agricultural water issues in conjunction with a recent field trip in Ohio. Read More
Co-Alliance employee
EmployeesNew Purdue Program To Focus On Talent Management
July 14, 2016
Purdue University’s Center for Food and Agricultural Business is starting a new professional development program to help food and agribusiness Read More
Industry NewsFMC Agricultural Solutions Appoints New Global Regulato…
July 14, 2016
FMC Corp. has named Andy Hedgecock as Global Regulatory Affairs Director for FMC Agricultural Solutions. He joins the company this Read More
Corn Field
Seed/BiotechWhat Can Inoculants Do For You?
July 13, 2016
When it comes to preventing disease and promoting growth in your plants, who couldn’t use a helping hand? By forming Read More
Microbes
Seed/BiotechMighty Farming Microbes: Companies Harness Bacteria To …
July 13, 2016
What if farmers, instead of picking up some agricultural chemicals at their local dealer, picked up a load of agricultural Read More