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

Aerial view of the West Fertilizer explosion site
FertilizerFertilizer Companies Blame City For West, TX, Explosion
August 6, 2014
El Dorado Chemical Co. and CF Industries contend the city failed to properly train the first responders and had insufficient protocols in place to battle the April 17, 2013, blaze at West Fertilizer Co. that triggered the explosion. Read More
FertilizerThe Fertilizer Institute: New President, Renewed Energy
February 3, 2014
Chris Jahn relishes the opportunity to lead the organization through the challenging times ahead. Read More
FertilizerA New Cycle For Fertilizer Demand
January 2, 2014
Changes in the corn market could have a major impact on the crop nutrients sector in 2014, say experts. Read More
FertilizerOSHA Hammers West Fertilizer With Over $100K In Fines For April Explosion
October 10, 2013
The Occupational Safety and Health Administration is fining the parent company of the West Fertilizer plant, Adair Grain Inc., $118,300 for 24 violations. Read More

Trending Articles

ManagementExpert To Discuss Farmland Value, Rent At Farm Science Review
August 18, 2014
While cropland values in Ohio increased in the past two years, they have remained flat in 2014, declining in some cases, according to an Ohio State University agricultural economist. Read More
EquipmentAdvance Your Technology IQ At MAGIE
August 13, 2014
The Midwest AG Industries Exposition (August 20-21) is the place you need to be to see, study and evaluate how new advances in the equipment, operations, crop protection and fertility sectors can help your business prosper. Read More
HerbicidesScouting Key To Next Season’s Soybean Herbicide Program
August 12, 2014
When growing soybeans, growers need to think ahead to stay one step ahead of weeds. That means examining weed threats and evaluating which herbicides work best. Read More
StewardshipMichigan Agriculture Leaders On Toledo Water Ban: We Want To Be Part Of The Conversation
August 8, 2014
Leaders of Michigan agricultural organizations said Thursday that the government should not have a “knee-jerk reaction” based on last weekend’s water ban in Toledo due to fertilizer run-off in Lake Erie. Read More
CropLife 100BRANDT Acquires Lemon Ag Services
August 4, 2014
The acquisition of Lemon Ag fits BRANDT’s aggressive corporate strategy of providing superior agronomic advice and services for customers in central Illinois. Read More
Eric SfiligojThe Resurgence Of Crop Protection
August 4, 2014
Plenty of new offerings over the next few years should see a rebirth for the crop protection products category in terms of market share. Read More

Latest News

CropLife 100Pinnacle Acquires California-Based Retailer
August 29, 2014
Pinnacle Agriculture Holdings will acquire Kerman Ag Resources, Inc., which will operate under Pinnacle's Performance Agriculture brand. Read More
Allied Cooperative Grain Plant
ManagementArcadia Co-op To Merge With Allied Cooperative
August 28, 2014
Allied Cooperative has announced that members of Arcadia Co-op voted in favor of a merger with Allied Cooperative, paving the way for the consolidation which will be effective on December 1, 2014. Read More
InsecticidesBioinsecticide VENERATE Now Registered In California
August 27, 2014
Marrone Bio Innovations' VENERATE is a new tool to help California growers control crop-damaging insect pests, fight the development of insect resistance and reduce pesticide residues on fruits and vegetables. Read More
CropLife 100Two Iowa-Based Ag Co-ops To Merge
August 27, 2014
The Board of Directors and management of United Western Coop, Missouri Valley, IA has completed a merger with Heartland Co-op, West Des Moines, IA, effective September 1, 2014. Read More
FertilizerKoch Expands AGROTAIN Nitrogen Stabilizer Portfolio
August 26, 2014
Koch Agronomic Services, LLC has added two new innovative nitrogen stabilizers to the AGROTAIN product family – AGROTAIN ADVANCED and AGROTAIN DRI-­MAXX. Read More
Seed/BiotechDuPont To Build Two Seed Treatment Centers
August 26, 2014
DuPont has announced construction on two state-of-the-art centers dedicated to developing and testing seed treatment formulations, applications and seed handling techniques in an important step toward bringing new solutions to growers. Read More
Seed/BiotechLoveland Products Acquires A Controlling Interest In Ag…
August 26, 2014
Loveland Products, a subsidiary of Agrium , has announced the company has acquired a controlling interest in Agricen, a Dallas-area agricultural biotechnology company delivering biochemical-based products for efficient and sustainable plant nutrition. Read More
StewardshipUp Close Look At The 2014 Environmental Respect Award W…
August 25, 2014
The 2014 Environmental Respect Award winners were honored recently at the 24th annual event in Wilmington, DE. Read More
Eric SfiligojAg Science Rejection Carries Consequences
August 25, 2014
As innuendo and fear dog the regulatory process, agriculture can’t get the new tools it needs to combat world hunger. Read More
LegislationFarmers Dismayed As New Farm Bill Dumps Direct Payments
August 25, 2014
The threatened end of cash subsidies to the nation’s row crop farmers dates back through at least the last two iterations of national agriculture policy legislation. Read More
MAGIE 2014 ShowStopper
EquipmentJohn Deere Again Wins MAGIE ShowStopper Award
August 25, 2014
For the second consecutive year, John Deere was honored at the Midwest AG Industries Exposition (MAGIE) for its new R4045 sprayer. Read More
CropLife 100GROWMARK CEO To Retire
August 22, 2014
GROWMARK chief executive officer Jeff Solberg has announced his retirement effective September 15, 2014. Read More
InsecticidesDuPont’s Prevathon Approved For Dry Beans
August 22, 2014
DuPont Prevathon insect control powered by Rynaxypyr has received EPA registration for foliar use on dry bean crops, including dried shelled peas and beans. Read More
ManagementNCGA DuPont New Leaders Program Enters Sophmore Season
August 20, 2014
The National Corn Growers Association and DuPont are pleased to announce the second year of the NCGA DuPont New Leaders Program. Read More
FungicidesVerdesian Links Up With Mitsui, Hokusan
August 20, 2014
Mitsui Chemicals Agro, Inc., and Hokusan Co., announced the signing of an exclusive licensing agreement allowing Verdesian Life Sciences global access to its patented technology for suppressing mycotoxin contamination in wheat and barley. Read More
SprayersUniversity Of Illinois Introduces New Spray App
August 18, 2014
University of Illinois Extension has released a new smartphone app for making sprayer-related calculations. Pesticide Spray Calculator, or Spray Calc, Read More
Crop InputsSyngenta Names New Manager Of Federal Government Relati…
August 18, 2014
Laura Wood Peterson has joined Syngenta as manager of federal government relations, based in Washington, DC. Read More
ManagementExpert To Discuss Farmland Value, Rent At Farm Science …
August 18, 2014
While cropland values in Ohio increased in the past two years, they have remained flat in 2014, declining in some cases, according to an Ohio State University agricultural economist. Read More