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Fertilizer prices stable but could change depending on China, corn area
Dec. 9, 2016
The Western Producer
CanadaFollow
CanadaIt’s shaping up to be a typical winter season for fertilizer prices, according to an industry-expert, but he cautions plant expansions in the U.S., corn acreage and the murky world of Chinese exports will all play a part in determining price direction in coming months.
“We’re probably expecting a typical season where two thirds of the fertilizer will be used in the spring. We don’t see anything out of the ordinary with one caveat — If we look at what’s going on in the nitrogen market, we’re opening three world scale plants here in the U.S.,” said David Asbridge, President at NPK Fertilizer Advisory Service in St. Louis, Missouri.
He says one of the plants is already open in Louisiana while two more should open soon in Idaho.With the harvest in North America largely over, prices for fertilizer are generally expected to “float along” in December, January and early February before experiencing a seasonal bump due to the planting season.
However, Asbridge cautions that if there are any delays to the scheduled start-up of the plants, prices could push higher.“Nitrogen prices could have a bit of a run up until more product comes up the river and is made available to dealers and farmers,” he explained.
When it comes to China, Asbridge says that country has temporarily closed some plants due to the low prices caused by the overcapacity situation in nitrogen, phosphorous and potassium.However, the Asian country has ramped up its production in recent years to become a major exporter, and if prices start to climb, they will likely resume selling more product.“China can be a huge driver in both nitrogen and phosphate markets,” he said. Of course production of some fertilizer types has slowed in Canada.
Saskatchewan-based Potash Corp recently laid off workers and cut production at some of its facilities due to low prices.“I don’t think prices have perked up enough yet that they’re going to reopen any of that stuff either,” he added.The amount of corn American farmers intend to plant next year will also impact fertilizer prices.
Right now, soybean prices are much more attractive than corn and as a result, many analysts expect soybean acreage to grow next spring at the expense of corn.“We think it (corn acreage) will come down to 88 to 90 million acres,” said Asbridge. “That will have a small impact on fertilizer consumption because corn is the biggest fertilizer user in the U.S.”However, Asbridge stresses he still believes fertilizer will likely follow its seasonal roadmap, with prices bumping up in the spring and again in the fall.
Still, with so many moving parts in the fertilizer complex, one major weather event or major trade issue could push prices to levels no one is expecting.
Source: THE WESTERN PRODUCER
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