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

FertilizerGypsum Added To List Of Conservation Practices
July 28, 2016
Crop farmers in a growing number of states may be eligible for financial assistance from the USDA’s Natural Resources Conservation Read More
Storage Tanks at Nachurs
Crop InputsNACHURS Joins Field to Market
July 27, 2016
NACHURS announced today that it has joined Field to Market: The Alliance for Sustainable Agriculture, a leading multi-stakeholder initiative working Read More
Illinois Researchers
FertilizerMeasure Of Age In Soil Nitrogen Could Help Precision Agriculture
July 26, 2016
What’s good for crops is not always good for the environment. Nitrogen, a key nutrient for plants, can cause problems Read More
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
Trending Articles
Southeast Farmers Coop - Finished Building
Retail FacilitiesNew Stueve Facilities Offer Ag Retailers Speed, Accuracy
July 9, 2016
Leading the industry in planning and constructing dry fertilizer storage and chemical warehouse solutions, Stueve Construction helped three ag retailers Read More
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
Latest News
FertilizerGypsum Added To List Of Conservation Practices
July 28, 2016
Crop farmers in a growing number of states may be eligible for financial assistance from the USDA’s Natural Resources Conservation Read More
Management2016 CTIC Cover Crop Survey: 33% Report ROI From Cover …
July 28, 2016
Insight from 2,020 farmers from across the country reflected enthusiasm for cover crops and—for the fourth year in a row—found Read More
Palmer pigweed seedhead in cotton
HerbicidesStudy: Fall Weed Controls Can Make Significant Impact O…
July 28, 2016
An article published in the latest issue of the journal Weed Science shows that adopting harvest-time and post-harvest weed controls Read More
InsecticidesSyngenta: Beware Of Early Stinkbug Threat To Soybeans
July 28, 2016
With the record warm temperatures this past winter and confirmations from early entomologist reports, Syngenta encourages growers to monitor stinkbug Read More
Peanut field
Crop InputsVerdesian Introduces New Inoculant For Peanuts
July 28, 2016
As planning begins for the next growing season, Verdesian Life Sciences adds Primo Power CL, a new liquid inoculant, to Read More
Soil Young Corn
Crop InputsSmithsonian: 5 Things to Know About New GMO Labeling Bi…
July 27, 2016
On July 14, the House of Representatives passed a bill requiring large food companies to label products containing genetically modified Read More
Palmer pigweed in soybean stubble
HerbicidesSpecial Issue Of Weed Science Explores Human Aspects Of…
July 27, 2016
Weeds that evolve resistance to herbicides are a serious threat to global agricultural production. In this Special Issue of Weed Science, Read More
CHS Primeland
CropLife 100CHS Businesses In Washington, Idaho Combining For Great…
July 27, 2016
As full-service ag retailers, CHS Primeland and CHS Farmers Co-op collectively serve farmers and other customers in 15 counties in Read More
Storage Tanks at Nachurs
Crop InputsNACHURS Joins Field to Market
July 27, 2016
NACHURS announced today that it has joined Field to Market: The Alliance for Sustainable Agriculture, a leading multi-stakeholder initiative working Read More
Illinois Researchers
FertilizerMeasure Of Age In Soil Nitrogen Could Help Precision Ag…
July 26, 2016
What’s good for crops is not always good for the environment. Nitrogen, a key nutrient for plants, can cause problems Read More
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