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

Crop InputsDuPont Pioneer: Corn Belt P and K Levels Lagging
August 24, 2016
A new DuPont Pioneer study conducted across 12 Corn Belt states demonstrates that growers may be leaving profit potential in Read More
Monsanto sign
Crop InputsCould a Monsanto-Bayer Union Be 2 Weeks from Fruition?
August 24, 2016
Via STLToday.com (The St. Louis Post-Dispatch): Merger talks between Monsanto Co. and Bayer AG are advancing after a series of Read More
Syngenta Sign
Crop InputsChemChina, Syngenta Receive Clearance From CFIUS
August 22, 2016
China National Chemical Corp. (ChemChina) and Syngenta have announced that the companies have received clearance on their proposed transaction from the Read More
Crop InputsEU Glyphosate Controversy Heating Up Yet Again
August 17, 2016
The battle over glyphosate rages on in Europe, creating a lot of question marks over whether the herbicide will continue Read More
Trending Articles
Key Cooperative Marcus Construction Steel Building
Retail FacilitiesMarcus Construction Builds High-Speed Agronomy Center For Key Cooperative
July 7, 2016
Key Cooperative in Grinnell, IA, wanted a state-of-the-art Agronomy Center to better serve its customers. Marcus Construction delivered exactly that. 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
Crop InputsDuPont Pioneer: Corn Belt P and K Levels Lagging
August 24, 2016
A new DuPont Pioneer study conducted across 12 Corn Belt states demonstrates that growers may be leaving profit potential in Read More
Monsanto sign
Crop InputsCould a Monsanto-Bayer Union Be 2 Weeks from Fruition?
August 24, 2016
Via STLToday.com (The St. Louis Post-Dispatch): Merger talks between Monsanto Co. and Bayer AG are advancing after a series of Read More
EquipmentCase IH Debuts Nutri-Tiller 955 Strip-Till Applicator
August 24, 2016
With strip-till continuing to expand across new acres, Case IH designed the new Nutri-Tiller 955 strip-till applicator to help producers Read More
EquipmentCase Launches Aim Command FLEX, 25th Anniversary Patrio…
August 24, 2016
Case IH announces new AIM Command FLEX advanced spray technology for greater application accuracy, as well as special 25th Anniversary Read More
ASMARK 2016 Retailers Live! Tour - CPS
CropLife 100CPS Acquires Texas Retail Operation
August 23, 2016
Crop Production Services (CPS) has acquired the assets of Larry’s Chemical and Spray, Inc., for an undisclosed amount in an Read More
PrecisionAg Video Conference
Precision AgVideo: PrecisionAg Vision Conference
August 22, 2016
A Strategic Conference Focused on the Future of Farm Digitization and Precision Agriculture Visit precisionagvision.com and register today! Read More
Young Corn Plants
Industry NewsOABA Welcomes Nicole Wallace As Communication & Adm…
August 22, 2016
The Ohio AgriBusiness Association has hired Nicole Wallace as its communication and administrative coordinator. Wallace will help provide comprehensive communication Read More
Syngenta Sign
Crop InputsChemChina, Syngenta Receive Clearance From CFIUS
August 22, 2016
China National Chemical Corp. (ChemChina) and Syngenta have announced that the companies have received clearance on their proposed transaction from the Read More
ManagementAg Industry Shows and Rumors
August 18, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about the upcoming trade show schedule, crop protection merger updates, and content for Read More
MAGIE 2015
EquipmentMAGIE Takes The Pulse Of The Ag Retail Industry
August 18, 2016
Every year, one of the major highlights of my career as an ag journalist is attending the Midwest AG Industries Read More
MAGIE 2015 Overview
EquipmentPride In Professionalism On Display At MAGIE
August 18, 2016
The Illinois Fertilizer & Chemical Association (IFCA) is proud to partner with CropLife IRON and continue the tradition of bringing Read More
SprayersJenner Ag To Debut 25th Anniversary Edition Case IH Pat…
August 18, 2016
Visitors at the 2016 Midwest Ag Industries Exhibition (MAGIE) in Bloomington, IL, will have a unique photo opportunity, as Jenner Read More
Crop InputsEU Glyphosate Controversy Heating Up Yet Again
August 17, 2016
The battle over glyphosate rages on in Europe, creating a lot of question marks over whether the herbicide will continue Read More
Industry NewsNew Partnership Provides Improved Representation At Ohi…
August 16, 2016
The Ohio AgriBusiness Association (OABA) has retained Belinda Jones of Capitol Consulting Group, Inc. (CCG) for government relations work in Read More
Tissue testing
FertilizerMosaic: 6 Tips For Better Crop Nutrition In Corn
August 16, 2016
Late in the crop season is a good time to assess visual nutrient deficiencies and ensure early- and mid-season deficiencies Read More
WebinarsWebinar Schedule
August 14, 2016
Register for one of our upcoming Webinars or access our archive of past Webinars to view recordings of presentations that may be of interest to you. Read More
Dow DuPont
Crop InputsDowDuPont Update: EU Takes Closer Look at Merger
August 12, 2016
Dow Chemical Co. and DuPont Co. face months of haggling with European Union antitrust regulators who opened an in-depth probe Read More
ManagementNews from InfoAg 2016 and Weed Wands
August 11, 2016
Editors Paul Schrimpf and Eric Sfiligoj review what happened at last week’s big Precision Ag event and a possible solution Read More