The Nitrogen Outlook For 2012

Corn Field

The outlook for the North American crop nutrient supplier industry remains very favorable. In its January update, USDA projected a U.S. ending corn stocks-to-use ratio of 6.7% for the 2011 marketing year, which would be the second lowest level in 40 years. This tight balance is expected to support high corn prices for 2012, providing growers a compelling incentive to plant corn — and to apply nitrogen-based crop nutrients.

U.S. farm income was a record high in 2011 and is expected to remain near this level in 2012. CF Industries, one of the largest North American based producers of nitrogen fertilizers, anticipates that U.S. growers will plant 93.5 million acres of corn in 2012, an increase of 1.6 million acres over 2011.

A Look At The Dynamics

To understand the outlook for nitrogen fertilizers, it is important to understand the market dynamics that played out in 2011 and set the stage for solid momentum heading into 2012. Annual U.S. demand for nitrogen fertilizers was the second highest on record in 2011 due to the strong crop plantings, especially of corn. The year began with a very positive outlook as the industry prepared for spring planting. Manufacturers and dealers alike expected strong spring plantings, and dealers were intent on exiting the planting season with low inventories.

However, excessive precipitation throughout the U.S. Corn Belt severely delayed planting for most crops, especially in the Eastern Corn Belt. These delays, combined with flooding in other areas, led to lower planted acreage than expected. With prolonged flooding and snarled transportation logistics, the challenges of moving crop nutrients by barge or rail during spring were significant and required a high degree of flexibility and ingenuity to keep plant nutrients flowing.

Despite these significant weather issues, corn planted acreage exceeded 90 million acres for just the second time, supporting a strong and extended ammonia and urea ammonium nitrate (UAN) solution sidedress application season. As a result, nitrogen fertilizer demand was abnormally strong into the summer months. Following a very wet spring, hot summer weather accelerated crop development, erasing the delays caused by late planting and setting the stage for normal harvest timing, but also reducing yields for many crops.  

The resulting high crop prices allowed growers to enjoy record farm income, which contributed to robust fall fertilizer application despite global macroeconomic concerns. Fieldwork was delayed by dry weather in areas such as southern Minnesota and Iowa. In addition, the severe drought in the Southern Plains resulted in reduced fall application there. The rest of the Corn Belt enjoyed good weather and nitrogen fertilizer demand remained very high, especially for fall-applied ammonia.  

Crop prices declined slightly in the fourth quarter of 2011 due to a combination of macroeconomic concerns and an increase in grain stock estimates.

Continuing The Trend  

In all, 2011 proved to be an excellent year for agriculture, and this momentum should continue as we enter 2012. Nitrogen producers are gearing up for a strong spring. As of mid-January 2012, CF Industries’ forecast for corn plantings is 93.5 million acres, which would tie the record set in 2007. A drought in Argentina and southern Brazil led to a recovery in crop prices beginning in mid-December, especially for corn and soybeans. Large plantings and strong crop prices are expected to support nitrogen fertilizer demand near record high levels in 2012.  

Global fertilizer trade will continue to have a bearing on domestic nitrogen markets during 2012 as the U.S. imports approximately 50 percent of its nitrogen requirements. Some key drivers in the global market include Chinese exports, India’s import demand and new production capacity. During 2011, Chinese nitrogen and phosphate fertilizer export tariffs became very restrictive, and this is expected to continue into 2012, reducing Chinese exports to the world market and lowering global supply. At the same time, demand in India has been growing at a pace of approximately 7% a year. This likely will continue unless agriculture policies providing significant subsidies to farmers are revised. These two factors have been instrumental in a short global nitrogen fertilizer balance the last two years and are expected to continue into 2012 as agriculture and domestic fertilizer demand in these countries continue to grow.  

In 2012, a number of large scale manufacturing projects are expected to begin production in the Middle East and Africa. This will take some pressure off of other nitrogen fertilizer suppliers in meeting rising global demand. The net effect of these new nitrogen sources likely will be a balanced market by mid-year, but this outcome will depend on the timing of large projects, which almost always experience start-up delays due to operational difficulties. Even before delays, typical ramp-up and delivery times will prevent most new supplies from reaching the U.S. market until after the spring season.

In order to meet increased demand for nitrogen fertilizers in North America in 2012 and beyond, CF Industries is investing in its logistics systems and production capabilities. Process improvements at our terminals in Cowden, IL, and Mount Vernon, IL, will increase ammonia supply and load out rates during the peak spring and fall periods. Other terminal upgrades also are planned over the next year. As previously announced, we will invest up to $1.5 billion in new ammonia and/or product upgrading capacity within North America over the next four years to ensure a steady flow of our products to dealers and ultimately growers who will use them to help feed the world’s growing population.

Leave a Reply

Fertilizer Stories

Young Corn Field
Crop NutritionNext Generation Of Nitrogen Efficiency Technology Converts Nitrogen To Bushels
June 13, 2016
Commodity price projections indicate farmers will continue to face tight margins again this year. Delivering higher yields and more bushels Read More
FertilizerMSU: Early Lake Erie Algal Bloom Projections Positive
June 1, 2016
Over the past decade, Lake Erie has seen an increase of harmful algal blooms (HABs). These algal blooms are made Read More
FertilizerSimplot Introduces Fused-Safe Ammonium Sulfate Nitrate Fertilizer
May 31, 2016
The J. R. Simplot Co.’s new FŪSN fertilizer is now commercially available to growers. Simplot uses advanced technology to fuse Read More
Crop InputsLand O’Lakes Announces Minnesota Water Quality Partnership
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
Trending Articles
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
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Latest News
Heritage Cooperative
CropLife 100Heritage, Agland Co-op Explore Mutual Merger Interest
June 30, 2016
According to a report in The Ohio Country Journal, Heritage Cooperative and Agland Co-op have entered into negotiations to consider Read More
Soybean Plant closeup
Crop InputsDow Launching New Soybean Burndown Herbicide
June 30, 2016
With the 2016 growing season nearing the halfway mark, many growers are scouting soybean fields to find unwelcome marestail plants Read More
ManagementUpdates on Glyphosate Use in the EU and Bayer/Monsanto
June 29, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss the latest important developments on these crop protection fronts. Read More
Industry NewsCompass Minerals Names Protassium+ Sales Director
June 28, 2016
Compass Minerals, the producer of Protassium+ sulfate of potash, has named Scott Johnson director of sales for Protassium+ North America. Read More
Eric SfiligojThe British Leave Vote Impact On EU Agriculture
June 27, 2016
Like virtually everyone else in the world this past week, I’ve watched the global reaction to Britain’s vote to exit Read More
Valent David Nothmann
Crop InputsValent Names David Nothmann Vice President Of Marketing
June 27, 2016
Valent U.S.A. Corp. has announced the appointment of David Nothmann as vice president of marketing. Nothmann will be responsible for Read More
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stew…
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
CropLife 100BRANDT Contributes To Mayo Clinic
June 27, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty agriculture products, has pledged a sizable donation to the Mayo Clinic Read More
ManagementReport: U.S. Farmland Values On Average Continue Gradua…
June 27, 2016
Land price movement has been in the forefront for farmers, landowners, lenders and land brokers for a decade now during Read More
AdjuvantsPrecision Laboratories Introduces Intact Xtra For Use W…
June 27, 2016
Precision Laboratories announces the launch of Intact Xtra, an adjuvant designed for applicators who want to maximize spray applications and Read More
Key Cooperative’s new liquid fertilizer, crop chemical, and seed facility in Grinnell, IA stores 1.5 million gallons of liquid fertilizer and 120,000 gallons of crop chemicals.
Retail FacilitiesKey Cooperative Facility Features The Latest In Murray …
June 27, 2016
When Key Cooperative wanted to improve the overall efficiency at its new state-of-the-art facility in Grinnell, IA, it turned to Read More
Allen Summers Asmark Institute PSM Training
EmployeesAsmark Institute Sponsors 25 ResponsibleAg Auditor Trai…
June 21, 2016
The Asmark Institute has announced plans to provide 25 scholarships through their affiliated State fertilizer and agrichemical associations to help encourage Read More
Kennebec Elevator
CropLife 100Wheat Growers Celebrates Kennebec Elevator Grand Openin…
June 21, 2016
Over 250 patrons and guests were on hand to celebrate Wheat Growers’ Kennebec Elevator grand opening. South Dakota Secretary of Read More
Land O Lakes
Industry NewsLand O’Lakes To Acquire Ceres
June 20, 2016
Land O’ Lakes, Inc. and Ceres, Inc. have announced that they have signed a definitive merger agreement under which Land O’Lakes Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To …
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
LegislationVilsack Christens WinField Crop Adventure, Talks Monsan…
June 17, 2016
The WinField Crop Adventure grand opening ceremonies at Fair Oaks Farms (near Winemac, IN) welcomed USDA Secretary of Agriculture Tom Read More
Crop InputsFields of the Future: WinField Doubles Down with Agri-E…
June 16, 2016
Land O’Lakes, Inc., joined by Agriculture Secretary Tom Vilsack, today will host Fields of the Future, a live broadcast about Read More