Anticipating Ag Market Softness

Now that the new year is almost half-a-month old, there’s one word that keeps coming up over and over in my chats with industry insiders – softness. For what seems like months now, virtually every crop input supplier and service provider I’ve talked to has mentioned this word when discussing their “read” on the market outlook for 2015. Of course, commodity prices being down by half from the high-water marks of two or three years ago will do that.

So if everyone is convinced softness is going to occur during 2015’s growing season, the bigger question becomes where it will hit exactly. Here, the picture gets a little harder to see clearly.

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For instance, on one hand, equipment manufacturers predict much slower sales for their products during 2015. But on the other hand, precision agriculture makers are gearing up for stronger demand during the year (at least based upon their planned product introductions).

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In the fertilizer world, everyone agrees that the projected 90 million plus acres of corn in 2015 will keep demand for nitrogen-based crop nutrients as high as ever. However, on the dry fertilizer side of the equation, growers are expected to seriously “mine their soils” when it comes to such items as DAP and potash.

Lastly, many market watchers expect custom application work to drop back from its 2014 levels during 2015 as growers seriously scrutinize such services. But on the flipside, almost no one predicts crop protection product usage will decrease as grower-customers continue to battle an ever-spreading host of herbicide-resistant weeds in their fields.

Over the next few weeks, these contrasting pictures should become clearer as growers begin to conduct their spring field work. And it will be interesting to see which areas of the ag economy experience softness for themselves.

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