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

FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
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

Trending Articles

Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More
EquipmentNew Holland Acquires Miller-St. Nazianz
September 3, 2014
The assets of Miller acquired as part of the transaction will become part of New Holland Agriculture, a CNH Industrial brand, building on a successful four-year partnership between the two companies. Read More
CropLife 100Pinnacle Acquires East Kansas Chemical
September 2, 2014
Ranked 82nd on the CropLife 100, East Kansas Chemical will operate as part of Pinnacle's Performance Agriculture brand. 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

Latest News

MicronutrientsVerdesian Acquires Micronutrient Supplier
September 30, 2014
Verdesian Life Sciences has acquired QC Corp., a producer and supplier of granular and dry micronutrients and ferrous sulfate products. Read More
Eric SfiligojHearing From Young Ag Voices
September 30, 2014
Potential future leaders in ag retail had the chance to shine at the recent Mid America CropLife Association meeting. Read More
Crop InputsSyngenta Appoints New Chief Operating Officer
September 29, 2014
Jon Parr will succeed retiring COO John Atkin at the end of the year. Read More
CropLife 100South Dakota Wheat Growers To Add Grain-Agronomy Facili…
September 26, 2014
Planned to be constructed in Kennebec, the facility will be located along the soon-to-be rehabilitated line of heavy-rail service from Chamberlain to Presho. Read More
CropLife 100GROWMARK Announces Vice President Appointments
September 25, 2014
Two individuals have been appointed Vice President positions on the GROWMARK executive team. Read More
FertilizerFertilizer Industry Organizations Join Global Alliance …
September 25, 2014
The Fertilizer Institute, the International Plant Nutrition Institute and the International Fertilizer Industry Association are encouraging the industry to promote the proper use of fertilizer products to minimize their environmental impact. Read More
Precision AgARA Organized Precision Forum Hits Capitol Hill
September 24, 2014
The Coalition for the Advancement of Precision Agriculture (CAPA) hosted its inaugural Precision Ag Forum, Sept. 18, in Washington, D.C. Read More
FertilizerFactors To Consider When Placing Fertilizer With Seed
September 24, 2014
The type of crop, fertilizer source, row spacing and soil environment all affect how much fertilizer can be safely applied with seed. Read More
FertilizerSidedressing Manure Into Corn Has Promising Results
September 24, 2014
Applying manure to growing crops can boost yields, reduce nutrient losses and give livestock producers another window of time to apply manure to farm fields. Read More
FertilizerWhen To Sample Manure For Analysis
September 24, 2014
Because the goal is to collect a sample that represents the manure actually being applied, the best time to sample is during loading or field application. Here's why. Read More
Syngenta
Seed/BiotechSyngenta Faces Second Lawsuit Over Agrisure Viptera Cor…
September 23, 2014
A second company has sued Syngenta AG over sales of genetically modified corn seed not approved by China. Read More
StewardshipCover Crops Field Guide For Farmers Expanded
September 23, 2014
Farmers interested in planting cover crops to improve soil health now have an updated and expanded resource in the second edition of the Midwest Cover Crops Field Guide. Read More
HerbicidesArysta LifeScience Launches Contest For Wheat Growers
September 23, 2014
The Flush after Flush Photo Finish contest encourages farmers across the U.S. to participate through Instagram or Twitter using the hashtag #FlushAfterFlush. Read More
FertilizerCF Industries Confirms Merger Of Equals Discussions Wit…
September 23, 2014
CF Industries Holdings, Inc. has confirmed that it is in preliminary discussions with Yara International regarding a potential merger of equals transaction. Read More
StewardshipProgram To Examine Ag-Related Practices, Policies To Pr…
September 22, 2014
A panel discussion on October 14 will include a significant discussion on key issues and solutions related to all aspects of harmful algal blooms. Read More
Eric SfiligojIt’s Product Of The Year Voting Season
September 22, 2014
Readers of CropLife IRON will choose 2014’s best new product over the next month. Read More
Palmer pigweed in soybean stubble
HerbicidesValent To Discontinue Gangster Herbicide
September 22, 2014
Valent will discontinue Gangster Herbicide after the 2015 growing season as growers can now deploy Fierce XLT herbicide in soybeans. Read More
Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More