Fertilizer Prices Forecasted to Continue Increase – What to Know – Podcast

    Nitrogen costs were already high throughout the 2020 production season, yet the market size is predicted to continue growth. The global Industrial Nitrogen Market was sized at $14 billion 330 million in 2020 and is anticipated to be at a worth of $20 billion 410 million by 2027, with a Compound Annual Growth Rate (CAGR) of 4.7% during this time frame.

    With nitrogen prices predicted to continue increase in the coming years, now is a great time for producers to work on their fertilizer use regime. 

    Recently, specialists at the University of Illinois at Urbana-Champaign conducted a study of historical USDA index values on prices paid for fertilizer from 1990 to 2021, which exhibited nitrogen fertilizer prices trending upward in conjunction with increased consumer demand for energy. The highest recorded price during the examined timeframe, 2008, is a period of unparalleled index values for fertilizer.

    This, then, is directly attributed to “rising demand in emerging markets and long-term supply concerns.” Of course, with the financial crisis in the same year, commodity prices consequently fell afterward, creating a financially difficult situation for agricultural producers. Now, however, the nitrogen index value is again trending upward; hopefully, crop prices will remain higher.

    The study conducted by Schnitkey et al., revealed that fertilizer prices were $746 per ton for anhydrous ammonia, $717 per ton for Diammonium Phosphate (DAP), and $600 per ton for potash on July 29, 2021, which were considerably higher values than in 2020 at the same time.

    In the breadth of a year, anhydrous ammonia increased by 53%, $487 per ton in 2020 to $746 per ton in 2021; DAP increased by 83%, $390 per ton in 2020 to $717 per ton in 2021, which is its highest price since 2008; and potash increased by 71%, $350 per ton in 2020 to $600 per ton in 2021. Prices are likely to stay high, given the strong demand for and cost of energy resources.

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    University of Illinois researchers included that their three highest observed prices for anhydrous ammonia, ($848 per ton in 2009, $845 per ton in 2012, and $875 per ton in 2013), resulted in operational fertilizer costs of $185 per acre for corn and $62 per acre for soybean production in 2009, $200 per acre for corn and $68 per acre for soybean production in 2012, and $193 per acre for corn and $65 per acre for soybean production in 2013.

    For relevance, Illinois is now predicting “above-average fertilizer costs for 2022. The 2022 corn and soybean budgets for high-productivity farmland currently have values at $193 per acre for corn and $63 per acre for soybeans.”

    According to Ag Valley Co-Op, headquartered in Edison, Nebr., Urea-Ammonium Nitrate (UAN) fertilizer prices quoted to area producers at this time last year have now seen close to a 200% value increase compared to current 2021 levels. Based on historical context around the highest-recorded prices, producers will want to be aware of elevating consumer demand for energy and consequential nitrogen fertilizer pricing impacts in 2022.




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