Will Fertilizer Fortunes (and Prices) Remain High in 2022?
January 19, 2022 For the fertilizer marketplace, 2021 was a banner year. According to the 2021 CropLife 100 survey, the nation’s top ag retailers saw their crop nutrition revenues grow to $15.3 billion. This represented an impressive 19% increase over the 2020 fertilizer category sales figure of $12.9 billion.
Of course, some market watchers will point out why this was the case — fertilizer prices more than tripled throughout the 2021 growing season. For instance, grower-customers were paying an average of between $300 and $400 per ton for anhydrous ammonia for the fall 2020 application season. One year later, this amount had ballooned to between $1,000 and $1,200 per ton — with some prices hitting the $1,500 mark in certain regions of the country.
Despite this fact, however, ag retailers reported no slowdown in their fall fertilizer application demand for 2021. “Our customers applied just as much fertilizer in 2021 as they did in 2020, if not more so,” was a common refrain from numerous ag retailers that talked with CropLife magazine during the annual Agricultural Retailers Association meeting in December.
Of course, the reason for this seems straightforward — U.S. growers made a lot of money in 2021. In fact, USDA’s Economic Research Service projected that U.S. net farm income increased by $18.4 billion from 2020 to $116.8 billion in 2021, so the added fertilizer costs were a bit easier to manage for most buyers.
Worries Ahead?
Going into the 2022 season, everyone is now asking the obvious question — can fertilizer continue to perform above average? Already, there have been several “black swan” events such as the continued logistics fallout from Hurricane Ida across the Gulf States last year to the Chinese government’s recent banning of phosphate exports through June. As a result, fertilizer prices are staying high — $1,135 per ton for anhydrous ammonia, $885 for monoammonium phosphate, $815 for diammonium phosphate, and $775 for potash (as of mid-December 2021).
Will this cause growers to consider changing their crop mix from fertilizer-intensive corn to soybeans? According to Emerson Nafziger, University of Illinois Professor Emeritus and Extension Crop Production Specialist, this probably won’t happen in 2022.
“We have the ability to go a year in Illinois without yield loss in some soils,” said Nafziger, speaking at a webinar hosted by the Illinois Fertilizer & Chemical Association this past fall. “The main issue is the phosphorus and potassium removed by the crops will need to be replaced eventually, and future supplies and prices are uncertain.”
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