A Precarious Fall

For the past several years, fall has been a profitable time for ag retailers. Healthy harvests and decent crop prices have helped grower-customers be flush with cash to spend. On average, the total crop input market has enjoyed annual 3% to 4% gains.

This doesn’t seem to be the case in 2006, however. After starting out with the promise of continued sales growth, ag retailers have largely not seen these projections pan out. Based upon current sales forecasts and advance fall input orders, 2006 looks like it will be the first year since 1991 that the aggregate crop input market in the U.S. will suffer a volume decline. Particularly hard hit will be crop nutrients, predicted to be down 8% to 10% by year-end, and crop protection products, off an estimated 5% as more grower-customer business shifts to trait-laden bioengineered seed.

As for the reasons for this decline, you can take your pick. Some experts say volatile energy prices (including natural gas and diesel fuel) convinced distributors to delay fertilizer purchases. In other cases, retailers chose to cut back their fertilizer inventories to make certain bins were empty at the end of the spring season.

Others point the finger more directly at grower-customers for the downturn. “Because of low corn and wheat prices and high energy input costs, U.S. farmers have been drawing down soil nutrient levels without replacing those nutrients,” says David Delaney, president of PCS Sales.

Either way, everyone who observes the market agrees that the 2006 fall season will be slower compared with the past few years.

Despite this news, market analysts predict that the 2006 crop input volume decline won’t have much staying power. As evidence, they point to several developments that should lead to a brighter outlook in 2007. First off, fertilizer prices appear to be stabilizing. Natural gas prices — which had been rapidly climbing since 2003 — are projected to fall approximately 10% going into the winter. This could convince nitrogen-based fertilizer suppliers to bring additional production on-stream. Passage of the Gulf of Mexico Energy Security Act, allowing for expanded natural gas drilling in the outer continental shelf, should also help. In addition, three urea plants in Egypt, Saudi Arabia, and the United Arab Emirates have come online earlier than expected. Combined, these plants are capable of exporting 2 million metric tons of product to the U.S., keeping prices soft.

Second — and perhaps more importantly — crop demands are on the upswing. According to USDA, corn demand will exceed production this year by nearly 1 billion bushels, severely curtailing the nation’s carryover supply. Much of this need is coming from the ethanol industry as efforts to find alternatives to fossil fuels ramp up. Long-range forecasts now project corn-planted area in the U.S. will top 85 million acres by 2009, an increase of 7% from today’s total. According to Dan Froehlich, U.S. agronomy manager for The Mosaic Co., this will undoubtedly lead to increased fertilizer applications in the coming years.

The bottom line from all these bits of data is simple — while retailers may be in a precarious position during fall 2006, the downturn shouldn’t last. The future looks to be brighter, for plenty of seasons to come.

Leave a Reply

Featured Stories
Eric SfiligojMonsanto Hears The WHO
March 27, 2015
Another challenge to the safety of glyphosate, and the responses from supporters and opponents, calls to mind a classic Dr. Seuss story. Read More
Spreaders17 Fertilizer Spreaders For 2015
March 25, 2015
Manufacturers shoot for versatility and accuracy in this year's crop of fertilizer spreaders. Read More
Crop InputsWorld Health Organization Report Contradicts Scientific Findings On Glyphosate
March 23, 2015
A new report from the World Health Organization has classified glyphosate with a “2A” rating as a probable carcinogen, a Read More
HerbicidesMARCH MADNESS: Industry Rallies Around Glyphosate Safety Amid Troubling Report
March 20, 2015
A newly published report from the International Agency for Research on Cancer (IARC) classifies the herbicide glyphosate as a "2A-rated possible carcinogen" and the ag industry responds by circling the wagons. Read More
Top 100 Articles
CropLife 100BRANDT Commemorates National Ag Day
March 20, 2015
The Illinois agriculture community gathered at BRANDT global headquarters on March 18 to celebrate National Ag Day behind this year's theme Sustaining Future Generations. Read More
Wheat Growers, North Central Farmers Elevator Pursue Merger
CropLife 100Wheat Growers, North Central Farmers Elevator Pursue Merger
March 3, 2015
Two CropLife 100 retailers — South Dakota Wheat Growers (ranked No. 11) and North Central Farmers Elevator (No. 19) — have entered into a Letter of Intent to unify the two companies into a newly named cooperative. Read More
Growmark Group
CropLife 100GROWMARK In 2015: Back, To The Future
March 2, 2015
The nation’s third largest ag retail organization is simultaneously moving forward while remembering its past. Read More
CropLife 100Pinnacle Expands Sanders Brand In The South
February 27, 2015
Pinnacle has acquired Hopkins Seed and Chemical in Qulin, MO, which expands the company's Sanders brand to nine Southern states. Read More
CropLife 100Pinnacle Launches New Providence Agriculture Location In Indiana
February 27, 2015
Pinnacle Agriculture Holdings — ranked No. 6 on the CropLife 100 — has established a new retail location in New Castle, IN, which will operate as part of Pinnacle's Providence Agriculture brand. Read More
Carl Casale of CHS
CropLife 100Cooperative CHS Returns $518 Million To Owners
February 23, 2015
The 2015 cash return to owners is based on CHS net income of $1.1 billion, the company's second highest on record. Read More
Latest News
HerbicidesNew EPA Glyphosate Restrictions Leaked To Reuters
April 1, 2015
U.S. regulators will put new restrictions on the world’s most widely used herbicide to help address the rapid expansion of Read More
FMC 3Rive 3D
Seed/BiotechFMC’s 3RIVE 3D Turns Heads
April 1, 2015
As winter trade shows tend to go, Commodity Classic tends to be a pretty big deal. You’ve got all the Read More
Nachurs Alpine Solutions, Liquid fertilizer, micronutrients, facility
MicronutrientsYara Launching YaraVita Procote Liquid Micronutrients
March 31, 2015
Yara North America, Inc. broadens its fertilizer coating offerings with the introduction of YaraVita Procote, oil-based micronutrient liquid suspensions that Read More
Industry NewsINCOTEC Board Member To Retire
March 31, 2015
JanWillem Breukink has decided to retire from his position on INCOTEC’s Board of Directors, effective April 1, 2015. This was Read More
MicronutrientsAgrium Deals Michigan Micronutrient Facility To Cameron…
March 31, 2015
Cameron Chemicals, Inc. has announced today that it has entered into a definitive agreement with Agrium Inc. to purchase the Read More
Industry NewsH.J. Baker Creates, Fills New Pacific Northwest Sales P…
March 30, 2015
H.J. Baker announced today that Gary Bingham has joined the company’s Crop Performance Division to further deepen its sales portfolio Read More
Algal blooms
StewardshipStudy: Algae From Clogged Waterways Could Be Used As Bi…
March 30, 2015
Water-borne algal blooms from farm fertilizer runoff can destroy aquatic life and clog rivers and lakes, but scientists are reporting Read More
Young corn plants
Stewardship4R Nutrient Stewardship Summit Coming To DC
March 30, 2015
The annual 4R Nutrient Stewardship Summit will be held on May 12 in Washington DC. The summit will include a full Read More
FungicidesSyngenta Suing Willowood Over Azoxystrobin Fungicide
March 27, 2015
Syngenta announced today that it has sued agrochemical maker Willowood, LLC., for patent and copyright infringement, as well as unfair Read More
ManagementRetail Week: The Future Of Mycogen Seeds; The 4Rs At Na…
March 27, 2015
Editors Eric Sfiligoj and Matt Hopkins discuss recent trips, including a look at the future of Mycogen Seeds at Dow Read More
Eric SfiligojMonsanto Hears The WHO
March 27, 2015
Another challenge to the safety of glyphosate, and the responses from supporters and opponents, calls to mind a classic Dr. Seuss story. Read More
Industry NewsMonty’s Plant Food Expands Sales Team
March 27, 2015
Monty’s Plant Food Company, a leader in natural soil enhancement and  plant fertility products, has hired Andrew Bullock as a Read More
Crop InputsSyngenta Louisiana Plant Poised For 2015 Production
March 26, 2015
As the 2015 planting season gets underway, growers across the country will need crop protection products to combat pests and Read More
Lake Erie Nutrient Stewardship
LegislationOhio Lawmakers Finalize Phosphorus Restrictions
March 25, 2015
State lawmakers on Wednesday finalized new rules designed to curb toxic algal blooms on Lake Erie, calling the regulations a major step forward in addressing the problem. Read More
Spreaders17 Fertilizer Spreaders For 2015
March 25, 2015
Manufacturers shoot for versatility and accuracy in this year's crop of fertilizer spreaders. Read More
Industry NewsMonty’s Hires Mid-South Product Consultant
March 25, 2015
Monty's Plant Food Co. has hired Matt Woodring as a Product Consultant for portions of Central Kentucky and Tennessee.    Read More
StewardshipMapShots Integrates With DriftWatch
March 23, 2015
Growers and agricultural providers using AgStudio FARM and AgStudio PRO can now view vital information about specialty crops and apiaries through a recent integration with the DriftWatch Specialty Crop Site Registry from FieldWatch, Inc. Read More
Crop InputsWorld Health Organization Report Contradicts Scientific…
March 23, 2015
A new report from the World Health Organization has classified glyphosate with a “2A” rating as a probable carcinogen, a Read More