The ‘Crazy Times’ for Fertilizer in 2022
January 26, 2022 For the past several months, supply chain shortages and price increases have dominated the general news. In agriculture, much of this discussion has focused on fertilizer. At the recent Wisconsin Agribusiness Classic, Joe Dillier, Managing Director for Ameropa North America, aptly described today’s fertilizer market in stark terms.
“It’s an unprecedented year; a crazy year,” said Dillier. “I’ve been in this business since 1989 and I’ve seen years where demand was pulling prices, like in the early 2000s, when natural gas prices connected to fertilizer prices, and I’ve seen years when costs were driving prices. But I’ve never seen a year like 2021, where EVERYTHING was mixed up, both on the demand and supply side!”
In actuality, the rollercoaster for fertilizer began as the calendar turned to the new year, he said. “Urea was selling for $250 per ton at the start of 2021, but it went up almost immediately thereafter,” said Dillier. “By spring, the prices really jumped, to $625 per ton. In a normal year, these would have dropped as the spring season ended. But that didn’t happen in 2021. By fall, urea was selling for more than $750 per ton.”
Of course, many in the ag retail marketplace are pointing to parallels between 2021 and 2008 to figure out what the fertilizer market might do during 2022. However, Dillier doesn’t think the two years are that similar for market watchers to see accurate predictions.
“Everyone remembers 2008 in the back of their minds,” he said. “The thing no one wants to do is repeat 2008, when lots of folks were stuck with unsold fertilizer. That was a near-death experience.
“But after 2008, there was a lot of fertilizer production expansion, which took place all the way until 2019,” he continued. “This brought fertilizer prices back down and kept them there, even as demand kept going up. But there’s nothing like that expansion coming to save us right now. So, I expect the fertilizer market to by very volatile over the next two years.”
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