Nitrogen Outlook For 2014

The 2014 outlook for the crop nutrient supplier industry in North America  remains favorable, supported by record 2013 corn production, above average corn prices and the highest reported level of U.S. farm income in more than four decades. Growers continue to have a significant incentive to plant corn to help feed the growing world population and support the production of renewable fuels.

During 2013, U.S. growers produced a record 14 billion bushels of corn, which is approximately one billion bushels higher than the previous record in 2009. At the same time, corn prices, while off their historic high, remain attractive and currently above the 10-year average of $4 per bushel. The USDA recently reported net farm income in 2013 of $131 billion, the highest level since 1973 on an inflation-adjusted basis and up $17 billion from 2012.

This combination of factors suggests that corn economics remain attractive. As a leading provider of nitrogen-based plant nutrients, CF Industries anticipates that U.S. growers will plant 92 million acres of corn in 2014, consistent with the five-year average. Along with other crops, this level of corn planted acres should lead to total U.S. nitrogen demand of 13.3 million nutrient tons in 2014, with domestic nitrogen producers operating as close to full capacity as possible, and imports satisfying approximately half of that demand.

A Look At The Dynamics

To understand the outlook for nitrogen fertilizers, it is important to understand the market dynamics that played out in the fall of 2013 and set the stage heading into 2014.

In the U.S., the harvest began late and continued behind average mainly due to the delayed spring planting season and a cool summer. As the season progressed, growing conditions generally were favorable and resulted in a record corn harvest. Throughout this period, we saw many growers and, consequently, fertilizer dealers and importers delay their purchases of plant nutrients. This was the result of the delayed harvest, the shortened fall application window and overall uncertainty about the direction of fertilizer prices.

Even though many growers and fertilizer dealers delayed their plant nutrient purchases in the fall, the profit potential from planting corn, wheat and other nitrogen-intensive crops supports robust planting intentions and underpins what CF Industries believes will be very positive nitrogen demand.

CF Industries believes nitrogen application rates in 2014 will be essentially unchanged from those of 2013. Fertilizer as a percent of farm revenue represents an excellent value. As a percent of corn revenue, 2014 U.S. fertilizer costs are projected to remain below the 10-year average of 20%.

As we move into spring, the North American supply and demand situation for nitrogen fertilizer appears to be balanced. The urea market is expected to experience the effects of natural gas supply constraints which have impacted a number of off-shore producers. The urea market should also benefit from what is projected to be a strong spring in North America and Europe, as well as high imports into South America.

At the same time, dealer inventories have been reported to be low and should require restocking. Ammonia should be in ample supply this spring. However, a combination of low dealer inventories and lower nitrogen imports sets the potential for tight availability for both urea and UAN.

Internationally, we expect 2014 will unfold differently than 2013. China’s new tax policy should have the effect of reducing seasonal price volatility in the urea market and, if market prices allow, should provide a more ratable supply. We believe that Chinese exports in 2014 will be similar to 2013 levels during the low tax window. We expect that India will absorb the lower priced Chinese exports along with Iranian exports. This should help balance Asian supply.

Commitment To The Nitrogen Market

During 2013, as growers and dealers delayed their fertilizer purchases, CF Industries was well positioned to maintain domestic production and supply by utilizing its extensive distribution network and by exporting, for the first time, all four primary nitrogen products.

CF Industries' Donaldsonville, LA, nitrogen complex expansion site.
CF Industries’ Donaldsonville, LA, nitrogen complex expansion site.

During the year, the company completed its purchase of the remaining assets of Canadian Fertilizers Ltd., the entity which owns and operates CF Industries’ Medicine Hat Nitrogen Complex. This acquisition has provided the company access to an incremental 425,000 gross tons of ammonia and 275,000 tons of urea from the site’s existing production. Together with the subsequent purchase of new distribution locations in Alberta, Manitoba and Saskatchewan, this investment has significantly enhanced CF Industries’ ability to serve customers throughout Western Canada.

As CF Industries proceeds with the announced divestiture of its phosphate operations, the company is moving forward with its $3.8 billion investment in the construction of new nitrogen production capacity at our Donaldsonville, LA, and Port Neal, IA, nitrogen complexes. These projects are progressing on time and on budget and are expected to increase our nitrogen production capacity by 25% upon their completion in 2015 and 2016.

Leave a Reply

Crop Inputs Stories

Pam Marrone
Crop InputsMarrone Bio Innovations Enters Biostimulants Market With Launch Of Haven Anti-Transpirant
March 23, 2017
Marrone Bio Innovations, Inc. is expanding beyond biopesticides and crop protection and into the biostimulant market by commercially launching Haven Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teaching Fertilizer Education
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
Corn Field
Crop InputsUltra Yield Micronutrients Acquires Kronos Micronutrients
March 16, 2017
Ultra Yield Micronutrients, Inc. ”Ultra”, an affiliate of Cameron Chemicals, Inc., is pleased to announce that it has acquired the Read More
Soybean Field
Seed/BiotechBayer Invests $8.1 million In Soybean Advancement In The Midwest
March 16, 2017
Growers in Illinois and across the Midwest now have the added benefit of a state-of-the-art soybean research facility, increasing accessibility Read More
Trending Articles
AdjuvantsA New Weed-Control Era Begins: But First, One Last Obstacle
March 4, 2017
There is trepidation, there is reluctance, and there is excitement. Ag retailers feel it all about the new dicamba and Read More
LIFT Academy video screenshot
Crop InputsLIFT Agriculture Academy: A Q&A With West Central Distribution’s Dean Hendrickson
March 1, 2017
West Central Distribution recently launched its LIFT Agriculture Academy, a new, premiere training and professional development resource for West Central’s ag Read More
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
Latest News
Pam Marrone
Crop InputsMarrone Bio Innovations Enters Biostimulants Market Wit…
March 23, 2017
Marrone Bio Innovations, Inc. is expanding beyond biopesticides and crop protection and into the biostimulant market by commercially launching Haven Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teach…
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
ManagementThink You Know Water? Take WinField United’s R…
March 22, 2017
Water is among our most precious resources, and arguably the hardest working, with just one percent available for human use, Read More
Corn Field
LegislationTFI Hopes Court Dismissal Is ‘Final Chapter’…
March 20, 2017
The Fertilizer Institute (TFI) released the following statement from President, Chris Jahn on the March 17, 2017, federal court dismissal Read More
Wheat Growers
Industry NewsWheat Growers CEO Dale Locken To Retire
March 20, 2017
CEO Dale Locken has announced that he plans to retire from Wheat Growers. Locken has served almost 15 years as Read More
Bayer Monsanto
Eric SfiligojBayer-Monsanto: Life, LibertyLink, And The Pursuit Of R…
March 20, 2017
As the calendar officially turns to spring, life is in full renewal mode. Flowers are blooming, birds are singing, and Read More
Corn Field
Crop InputsUltra Yield Micronutrients Acquires Kronos Micronutrien…
March 16, 2017
Ultra Yield Micronutrients, Inc. ”Ultra”, an affiliate of Cameron Chemicals, Inc., is pleased to announce that it has acquired the Read More
ManagementSnowstorms, Asset Sales, and Soybeans Prices
March 16, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss the weather, precision ag, crop protection company mergers, and commodity prices in this Read More
Soybean Field
Seed/BiotechBayer Invests $8.1 million In Soybean Advancement In Th…
March 16, 2017
Growers in Illinois and across the Midwest now have the added benefit of a state-of-the-art soybean research facility, increasing accessibility Read More
CHS
CropLife 100CHS Acquires Western Co-op Transport Association
March 16, 2017
CHS Inc., North America’s leading farmer-owned cooperative and a global energy, grains and foods company, has purchased Western Co-op Transport Read More
Young corn plants in soil
HerbicidesBest Management Practices To Control PPO-Resistant Weed…
March 14, 2017
Weeds resistant to the class of herbicides called protoporphyrinogen oxidase (PPO) inhibitors are spreading at a faster rate than weed Read More
Photo credit: The United Soybean Board/The Soybean Checkoff.
Eric SfiligojFungicide Resistance On The Horizon
March 13, 2017
For many years now, the agricultural market has struggled to keep ahead of an ever-growing number of herbicide-resistant weeds. According Read More
Management2017 Commodity Classic Review
March 10, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss what happened at the recent Commodity Classic in San Antonio. Read More
Farmer using AgriSync
ManagementMajor AgriSync Update Aims To Extend Ag Experts’ Power …
March 10, 2017
AgriSync announced a major update to its leading collaboration and service management tool for professional ag advisors and their farmer Read More
Agrible Pocket Spray Smart App
EquipmentNew Agrible Pocket Spray Smart App Alleviates Spraying …
March 10, 2017
There’s a new app to help farmers decide when to spray their fields. Pocket Spray Smart is a free iOS Read More
BPIA logo
Crop InputsBiological Products Trade Association Changes Name, Exp…
March 9, 2017
The Biological Products Industry Alliance (BPIA), formerly the BioPesticide Industry Alliance, is the new name of the rapidly growing U.S.-based Read More
BBI MagnaSpread Salford BBI
Equipment14 Fertilizer Spreaders For 2017
March 9, 2017
Application equipment manufacturers stressed flexibility and accuracy with this year’s crop of fertilizer spreaders. From AGCO’s TerraGator TG9300B and Case IH’s 810 Read More
Sonny Perdue
LegislationARA: Sonny Perdue Confirmation Delay Simply A Paperwork…
March 9, 2017
It’s been seven weeks since the White House named former Gov. Sonny Perdue (R-Ga.) as the nominee for the next Read More