The Two Faces Of Fertilizer

If crop inputs were seen as Zodiac signs, fertilizer would definitely be a Gemini. On the positive side, fertilizer was in high demand throughout 2007, with total sales among CropLife 100 retailers topping $6.7 billion. This represented a 13.6% increase from the 2006 total. Indeed, several of the largest ag retailers reported their fertilizer sales were more than $500 million in 2007, with one company recording fertilizer revenue in excess of $1 billion.

“As farm size and input costs increase, farmers are looking to buy in truckload quantities delivered to the farm,” says Frank Schumacher, operations manager for Mountain View Co-op.

Of course, the reason for this incredible uptick in fertilizer sales is directly tied to the increase in corn acreage. In 2007, U.S. growers planted almost 93 million acres of corn in an effort to take advantage of higher corn demand from the growing ethanol production sector. Since growing corn typically accounts for 43% of total domestic fertilizer usage, this 19% acreage increase from 2006 translated into some very positive revenue numbers for the majority of CropLife 100 retailers.

On the negative side, many retailers weren’t able to completely enjoy the fruits of this fertilizer bonanza. According to The Fertilizer Institute, the average prices paid for the three major fertilizer segments — nitrogen, phosphorus, and potash — have increased 113% in the past 15 years. Since 1999, the average cost of anhydrous ammonia has risen 172% as domestic suppliers have closed their doors. This has forced ag retailers to contract to receive much of their supply from overseas, increasing the capital investment needed up front while lengthening the delivery time.

“The amount needed to run our business is up 50% at minimum,” says Thomas Fullenkamp, president for Golden Furrow Fertilizer, Inc. “It seems that you need to purchase early to lock in prices in a continually changing market.”

Dan Kennedy, general manager for Ritter Crop Services, agrees. “The biggest challenge I see is trying to control the risk we carry in the fertilizer business,” says Kennedy. “With fertilizer prices at all-time highs, this could have a significant impact if the market moves the wrong way.”

Despite this fact, most CropLife 100 retailers remain happy with how they receive their fertilizer. When asked if they were satisfied with their current macronutrient delivery, 62% indicated they were. Another 12% said they were “very satisfied” with their deliveries. Only 26% of respondents said they were “not satisfied” (see chart).

More Corn Or More Beans?

Even with its stellar performance in 2007, retailers surveyed in the CropLife 100 were hesitant to predict smooth sailing for fertilizer revenue moving into 2008. According to many respondents, fertilizer’s fortunes will remain tightly tied to the fortunes of corn. Here, the future is cloudy indeed.

Early in 2007 as ethanol plants were springing up like dandelions and demand for source corn was skyrocketing, crop analysts were predicting that U.S. growers would have to plant an additional 5 million to 6 million acres of corn in 2008 just to keep up with this demand. Then in July, a slowdown in ethanol plant construction coupled with lower corn commodity prices and higher fertilizer prices had many market watchers forecasting a downturn in corn acreage and a comeback in soybean acres, helped by the fact that soybeans hit $9 per bushel in the fall.

Today, no one is certain which direction the overall market will head. That includes the majority of CropLife 100 retailers. When asked if they expected corn acreage to be up or down in 2008 compared to 2007, the results were dead even — 41% apiece. The remaining 18% thought corn acreage would be flat.

“Higher cost fertility inputs will pose many problems this coming year,” says R. Hovey Tinsman III, president for Twin State Inc. “Fertility costs could drive farms to plant more beans.”

As for soybeans, a sizable majority — 73% — said they expected acreage to increase as per-bushel prices remain at record highs. Only 7% of respondents believe soybean acres will fall in 2008, with the remaining 20% expecting no change vs. the 2007 totals. 

Leave a Reply

Fertilizer Stories

Fertilizer Storage
Crop InputsThe State Of The Fertilizer Industry
February 9, 2017
He’s all hat, no horse.” It’s a humorous way of describing a person who tells a good story, but is Read More
CF Industries Port Neal, IA plant
Crop InputsNitrogen Outlook 2017
February 3, 2017
It’s no secret that the global supply of nitrogen has been increasing significantly in recent years, helping drive down prices Read More
Fertilizer Potash
Crop InputsThe Phosphorus/Potash Outlook For 2017
February 2, 2017
If the old adage that “the cure for low prices is low prices” holds true, then phosphorus (P) and potash Read More
FertilizerThe Fertilizer Institute Commends Senate Vote For Secretary Of Transportation
February 2, 2017
The Fertilizer Institute (TFI) President Chris Jahn issued the following statement on the Senate confirmation of Elaine Chao to serve Read More
Trending Articles
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize 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
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
Latest News
ManagementSouth Africa Update and the New New Leader G5
February 24, 2017
Editors Eric Sfiligoj and Dan Jacobs discuss the recent visit to South Africa by sister magazine AgriBusiness Global and the Read More
Fall Creek Watershed
StewardshipUpdate: Nutrient Stewardship In Indiana Requires Cool, …
February 24, 2017
Update: The application deadline for NCRS funding has been extended to March 17, 2017. Green leaves sparkle in the sunlight. Trees Read More
Greenleaf Technologies TADF03-D Dual Fan Nozzle
NozzlesSix Greenleaf Nozzles Approved For XtendiMax With Vapor…
February 22, 2017
Greenleaf Technologies has announced that six of its TurboDrop D Series nozzles have been approved for use with Monsanto’s XtendiMax Read More
Winter Wheat
Industry NewsTiger-Sul Hires Manitoba And Eastern Canada Account Man…
February 22, 2017
Tiger-Sul, a global leader in sulphur fertilizers and crop performance products, has announced that sales veteran Trevor Loewen has joined Read More
NFMS 17 Hagie Sprayer
Eric SfiligojThe Read From Louisville: Uncertain
February 22, 2017
By the time this column appears across the country, the annual Commodity Classic will be in full swing. This means Read More
SprayersApache 1000 Series Sprayer Earns 2017 EquipmentWatch Hi…
February 21, 2017
ET Works has been named a winner in the 2017 EquipmentWatch Highest Retained Value Awards program, the industry’s only award Read More
Measuring Bulk Tanks
StewardshipMeister Media Among 2017 Award Winners Presented By The…
February 21, 2017
The Pesticide Stewardship Alliance (TPSA) held its annual conference in San Diego, CA, earlier this month where three awards were Read More
John Reifsteck
CropLife 100GROWMARK’s Reifsteck Earns NCFC Director Of The Y…
February 21, 2017
GROWMARK Chairman of the Board and President John Reifsteck has earned the prestigious Director of the Year Award from the Read More
Roy Blunt
LegislationARA Recognizes Blunt, Heitkamp For Legislative Efforts …
February 17, 2017
Agricultural industry continues to face federal regulatory challenges. Thankfully, agriculture’s allies in the U.S. Senate stepped forward. The Agricultural Retailers Read More
LegislationThe Fertilizer Institute Commends Senate On Confirmatio…
February 17, 2017
The Fertilizer Institute (TFI) President Chris Jahn issued the following statement on the Senate confirmation of Oklahoma Attorney General Scott Read More
Trump, Senate, Cabinet
LegislationBREAKING: Trump EPA Nominee Scott Pruitt Confirmed by S…
February 17, 2017
Scott Pruitt, who as Oklahoma’s attorney general spent years suing the Environmental Protection Agency over its efforts to regulate various Read More
ManagementFebruary Road Trip Edition
February 17, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent visits to Indiana and Kentucky. Read More
Heritage Cooperative Finished Building Aerial
ManagementHeritage Cooperative, Agland Co-op Approve Merger
February 17, 2017
Agland Co-op and Heritage Cooperative stockholders have both approved the merger agreement between Agland Co-op and Heritage Cooperative. Now begins Read More
LegislationARA Fly-In: Ag Retail Descends on Capitol Hill, Lawmake…
February 15, 2017
More than 100 agricultural retailers, distributors and suppliers headed to Capitol Hill Tuesday morning for the Agribusiness Congressional Fly-in, according to a Read More
Untreated soybean seed Heartland Coop
Seed/BiotechMarrone Bio Innovations, Groundwork BioAg Bio-stacked M…
February 13, 2017
Marrone Bio Innovations, Inc. and Groundwork BioAg, Ltd have announced successful seed treatment field trials of the world’s first all-biological Read More
NL5000 With G5 Technology
SpreadersNew Leader Introduces NL5000 Dry Nutrient Applicator Wi…
February 13, 2017
New Leader, a division of Highway Equipment Company (HECO), has announced the next generation of spreading technology with the NL5000 Read More
Fertilizer Storage
Crop InputsThe State Of The Fertilizer Industry
February 9, 2017
He’s all hat, no horse.” It’s a humorous way of describing a person who tells a good story, but is Read More
CropLife 100Pinnacle Agriculture Agrees To Credit Agreement Amendme…
February 9, 2017
Pinnacle Operating Corp. has entered into an amendment (the “Amendment”) to its First Lien Credit Agreement that will provide for, Read More