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

FertilizerNutrient Management, Conservation Among Topics Covered At Indiana CCA Conference
November 23, 2016
Certified crop advisers, consultants, farmers, agribusiness professionals and students will learn more about nutrient management, soil and water conservation, pest Read More
NutriSphere-N Application
Crop InputsVerdesian: NutriSphere-N Making A Water Quality Difference In Midwest
November 18, 2016
Farmers sitting on the largest aquifer in the United States have learned a thing or two about managing nitrogen (N) Read More
FertilizerThe Fertilizer Institute Issues Statement On The U.S. Elections
November 10, 2016
The Fertilizer Institute (TFI) President Chris Jahn has issued the following statement on the results of the 2016 elections: “TFI Read More
Fertilizer Storage
FertilizerThe Fertilizer Institute Hires New Director Of Agronomy
November 4, 2016
The Fertilizer Institute (TFI) has hired Dr. Sally Flis as its director of agronomy, a new position created to support Read More
Trending Articles
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Monsanto sign
Crop InputsMissouri Governor Meets With Bayer CEO To Discuss Monsanto Merger
November 21, 2016
Missouri Gov. Jay Nixon visited Bayer AG global headquarters in Leverkusen, Germany, on November 18 to discuss the proposed Bayer-Monsanto Read More
STS16 2017
SprayersHagie Manufacturing Releases 2017 STS16 Sprayer To Market
November 16, 2016
Hagie Manufacturing LLC’s largest full season applicator is now available with enhancements for the 2017 model year. Hagie is officially Read More
Latest News
Ryan Bartlett
Crop InputsCompass Minerals Appoints Vice President, Innovation An…
December 8, 2016
Ryan Bartlett, Ph.D., has joined Compass Minerals as vice president, innovation and product development. Dr. Bartlett will be responsible for Read More
HerbicidesHerbicides 2017: New Cropping Systems Set For Debut
December 7, 2016
Herbicide-resistant weed are inching ever-closer to a potentially frightening saturation point here in the U.S. Heading into 2016, USDA planting Read More
CropLife 100Wilbur-Ellis Acquires Michigan Ag Retailer
December 7, 2016
Wilbur-Ellis’ Agribusiness, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed and nutritional Read More
Fertilizer storage The Andersons
CropLife 1002016 Fertilizer Report: Another Really Rough Year For A…
December 7, 2016
In many ways, the fertilizer category cannot seem to catch a break. During the early part of the 2010s decade, Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Winter wheat
HerbicidesTalinor Herbicide Approved For Wheat And Barley
December 7, 2016
Talinor herbicide from Syngenta has received federal registration from the U.S. EPA, giving wheat and barley growers a new option Read More
Forage Sorghum
UncategorizedMilestone Achievement Continues For Dow AgroSciences, A…
December 7, 2016
New and innovative forage products are on the horizon driven by continued collaboration between Dow AgroSciences, a wholly owned subsidiary Read More
Palmer pigweed seedhead in cotton
HerbicidesNew WSSA Factsheet Explores Weed Seeds And Their Longev…
December 7, 2016
Did you know some weed seeds can lie dormant in the soil for more than a century and then sprout Read More
Crop InputsARA 2016: 5 Developments Worth Monitoring Into 2017
December 6, 2016
You can pretty much set your watch to it (do people even still wear watches? I know I do…but I’m Read More
Tim McCardle, ARA Chairman
CropLife 100BRANDT COO Named ARA Chairman
December 5, 2016
BRANDT EVP and Chief Operating Officer Tim McArdle has been named chairman of the Agricultural Retailers Association (ARA) during a Read More
Crop InputsWilbur-Ellis Receives ResponsibleAg Certification At Mo…
December 5, 2016
Wilbur-Ellis Co., a recognized leader in precision agriculture technology and the distribution of crop protection products, announces the ResponsibleAg certification Read More
Young Corn Closeup
Eric SfiligojThe Read On 2017 For Agricultural Fortunes Is Anybody’s…
December 5, 2016
As I (and others) have written in recent months, the nation has just experienced one of the most offbeat election Read More
Acceleron B-300 seed coating
Crop InputsThe BioAg Alliance Launches New Yield-Boosting Microbia…
December 5, 2016
As part of their commitment to develop and commercialize innovative microbial solutions for farmers through The BioAg Alliance, Monsanto Co. Read More
ManagementCorn and soy planting update; Takeaways from Climate Co…
December 2, 2016
AgriBusiness Global Editor Dave Frabotta Joins Paul Schrimpf for a discussion of global corn and soybean planting trends, and a Read More
Radish cover crop taproot
Crop InputsSoil Health Institute, Datu Research Receive Grant To E…
December 1, 2016
The Soil Health Institute (SHI) and Datu Research have announced a $626,000 grant from the Walton Family Foundation to quantify the Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
ManagementAg Industry Comes Together To Address Climate Change
December 1, 2016
Addressing climate change — and more specifically, decreasing greenhouse gas emissions from agriculture — can only be achieved through collective Read More
Young soybean field
HerbicidesLiquid Formulation Valor EZ Herbicide Available For 201…
December 1, 2016
Valent U.S.A. Corp. has released Valor EZ; a liquid formulation of the company’s leading herbicide, Valor. Named Valor EZ Herbicide Read More