Spring Fertilizer 2013 Outlook: More Of The Same

When it comes to crop inputs, there’s little denying that the whole of the 21st century has largely belonged to the fertilizer segment. With the exception of a brief pause during mid-2008, overall fertilizer sales for ag retailers have been at near-record highs year after year. In 2012, for example, ag retailers that comprised the CropLife 100 had $15.2 billion in fertilizer revenues, with the segment holding a solid 55% market share of all crop input sales.

Even more telling, these numbers could have been stronger if 2012 had cooperated, weather-wise. During the early part of the year, weather conditions seemed perfect for planting and spring fertility application work. Unfortunately, an extremely dry late spring turned into a bone-dry summer for much of the country. According to most ag retailers, this severely curtailed fertilizer applications.

“The full impact [of the drought] is very difficult to predict as some parts of our trade area have experienced severe crop loss while others have had much less,” said Doug Busdeker, senior manager, Northern farm centers for The Andersons, Inc., Maumee, OH, during a fall 2012 interview.

At the end of the year, U.S. corn production was off 13% to 272.4 million metric tons according to USDA — its lowest level since 2006-07.

Corn Is The Key

So with 2012 behind the industry, what is the early read on 2013? According to most market watchers, the answer is extremely positive. “Agricultural fundamentals have never been stronger,” said Jason Newton, head of market research for Agrium, speaking at The Fertilizer Institute’s Outlook & Technology Conference this past November. “Grower cash margins and income levels are at record highs.”

Of course, on the most basic level, corn is the key for fertilizer usage in the U.S. As commodity prices for this important cash crop have remained high during the past couple of years, the nation’s growers have steadily increased their planted acres accordingly. In 2012, 96.9 million acres were planted (although approximately 10 million of this total was lost during the drought).

In 2013, market watchers again expect a strong year for corn acreage. According to most models, corn acreage should again top 96 million acres, with soybeans and wheat also up. Only cotton is projected to see an acreage decline.

“Crop prices are good and 2013 acreage will be high,” said Rich Pottorff, chief economist for Doane Advisory Services at the TFI Outlook Conference. “Fertilizer demand should also be good.”

Among the three major fertilizer sectors, this projection means the most for nitrogen-based crop nutrients (N) such as anhydrous ammonia (NH3) and urea. In any given year, approximately half of the N used in the U.S. is applied to fields growing corn. Wheat comes in a distant second at 13% (although acreage projections also show wheat acres being up for 2013).

So in terms of N fertilizer usage in 2013, most analysts are projecting a modest increase across all segments. According to Arvin Pirness, manager, market research for PotashCorp, NH3 demand should show a slight increase from 17.2 million tons in 2012 to 17.3 million tons this year. Meanwhile, urea demand is expected to increase from 7.5 million tons in 2012 to 7.6 million tons in 2013. As for N solutions, these should grow from 13 million tons in 2012 to 13.1 million tons in 2013.

“Agriculture fundamentals are providing an optimistic backdrop for the upcoming fertilizer season,” says Pirness. “This is especially true when it comes to North American N demand.”

More P Mining

If there was one segment among the major fertilizer types that had the roughest time in 2012, it was phosphate (P). As Juan Von Gernet, senior consultant, phosphates for CRU Group, puts it: “The USA is a mature market with falling P demand.” Of course, this situation wasn’t helped much by the lingering nationwide drought across much of the country, which kept growers from applying new P to their fields instead of mining what might have already been there. With these factors working against it, the P segment saw its usage rates plunge from 5.6 million tons in 2011 to 5.2 million tons in 2012.

Despite this fact, Von Gernet is confident that P demand will begin a modest rebound during 2013. “The downward trend is likely to flatten in 2013 before recovering a year later,” he predicts. With this in mind, he projects that P demand in 2013 will increase 6% to 5.5 million tons by the end of the year.

A Long Way Back For K

For the final fertilizer macro-segment, potash (K), the past few years have been ones of recovery. In 2008, K consumption in the U.S. was at 4.2 million tons. However, critically high prices put an end to much of this demand and by the following year, with usage dropping 33% to 2.8 million tons.

Since this low point, K fortunes have steadily improved. By the end of 2010, the segment had recovered almost all of its lost demand, topping 4.1 million tons for the year. In 2011, K consumption topped 4.4 million tons — and it managed to increase another 0.1 tons in 2012 to 4.5 million tons.

But, according to Agrium’s Newton, 2013 will mark an end to this modest winning streak. “In 2013, I expect overall K consumption to be flat, driven by crop area and application rates,” he says.

As for why he expects this to be the case, Newton points to the after effects of the drought to continue to negatively impact K demand this year. “The most severely affected regions will likely reduce their application rates,” he says. “Furthermore, areas west of Central Illinois still require moisture.”

In addition, he adds, soil test results for K from 2012 in many areas of the country were not “significantly different than previous years.”

Yet, there are a few factors that might work into higher K demand from grower-customers during 2013. For one thing, there is an overall long-term trend of declining K levels in U.S. soils, magnified by increased silage (which equates to increased K uptake, according to Newton).

More encouragingly, Newton believes at least part of the U.S. will finally shake off the effects of the drought of 2012 as this past winter’s moisture figures are beginning to show. “There are signs of improved moisture in the Eastern Corn Belt,” he says.

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
Kochia
Crop InputsNufarm Launches New Herbicide for Resistant Kochia
July 25, 2016
Nufarm introduces Scorch herbicide for U.S. farmers and ranchers combating a broad range of troublesome broadleaf weeds. A unique premix Read More
ManagementNew Rabobank Report Calls for Farmer ROI Focus
July 25, 2016
As U.S. row crop farmers brace themselves for a third year of negative margins, Rabobank believes farmers must lower the Read More
Syngenta Sign
Crop InputsBloomberg: Syngenta-Chem China Deal on Track for Regula…
July 25, 2016
Syngenta AG, which has agreed to be taken over by China National Chemical Corp. for $43 billion, said talks with Read More
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