What is in this article?:
• The uncertainties of price and supply at the farmer level have translated into lower supplies among fertilizer distributors.
• Harry Vroomen, vice-president for The Fertilizer Institute says the increased demand for fertilizer is not being pushed by increased acreage, rather by increased demand for higher yield.
INCREASED DEMAND for higher yields is driving increased demand for fertilizer worldwide.
Row crop planting across the Southeast has generally been ahead of schedule this spring, but fertilizer sales have not kept pace with early planting, primarily because of the unpredictability of both price and supply of nitrogen and potash in recent years.
The uncertainties of price and supply at the farmer level have translated into lower supplies among fertilizer distributors. The risk of owning product too early in a market that is trading near its traditional peak value has kept suppliers from buying large quantities of popular fertilizers.
In the U.S., fertilizer sales are running slightly behind last year, despite the prediction that U.S. corn farmers may plant a record crop this year and an estimated 57 million acres of wheat are in the ground.
Harry Vroomen, vice-president for The Fertilizer Institute says the increased demand for fertilizer is not being pushed by increased acreage, rather by increased demand for higher yield.
The current high prices of crops and subsequent increase in demand for fertilizer drives the need for high yielding crops, he says.
Therefore, having more acres in the ground may not be an accurate indicator of demand for fertilizer. More importantly number of acres planted may not have a direct bearing on price of fertilizer throughout the growing season.
Fertilizer suppliers are in a no-win situation. If they buy now, they may be stuck with products that are over-priced by the middle of the growing season. If they delay buying supply, they may miss peak demand by farmers.
In the long-term, most analysts seem to agree that waiting too long to position supply could be a bigger economic problem than getting stuck with too much product too early in the season.
Farmers are in an equally dicey predicament. If they bought their fertilizer early in the year, they may have missed out on expected drops in nitrogen prices in the second half of 2012.
If the price drop comes early enough, most growers in the Southeast can still get products on crops during the season. If price drops are delayed, they may pay higher prices near the peak of the sales cycle in late spring and early summer.