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.
U.S. largest importer
The U.S. is the largest importer of fertilizer. In 2012, U.S. growers are expected to use more than 11 million tons of imported nitrogen.
Total fertilizer imports are expected to reach 20 million tons this year. In the past seven years, U.S. demand for nitrogen has increased by nearly five million tons.
Prices for two popular sources of nitrogen, UAN and DAP, look promising for the latter part of the 2012 growing season. Strong seasonal demand for urea and UAN will likely keep UAN prices at current levels in the short-term.
Lower prices for urea in the first quarter of 2012 is a primary reason for expected stability in the UAN market.
DAP and MAP demand has increased in recent years and is expected to remain high for the upcoming planting season in South America, combined with high levels of DAP purchases in India have moved DAP prices up for U.S. importers.
At the farmer level, there is likely to be an increase in DAP pricing early in the growing season, with some possible price stabilization later in the growing season.
Vroomen says the price of DAP and MAP are centered around three primary ingredients: Phosphate rock, sulfur and ammonia.
Huge rises in sulfur prices, because of increased demand in China and equally large increases in ammonia costs were the primary factors in price increases for DAP and MAP over the past 6-7 years, he contends.
Vroomen says supply likely will be a bigger issue for potash in the future. He says there are only 13 countries in the world that produce potash and only 10 countries export it. China and the U.S. are the largest importers of potash.
Again, he says, what happens in other parts of the world are likely to have a bigger impact on potash prices than what happens with crops in the U.S. over the first few months of the 2012 planting season.
High yield expectations are likely pushing potash purchases in the Midwest, where record corn and high soybean acreage is predicted.
However, early season demand has not pushed potash prices up significantly. As demand for pre-plant buying for huge grain acreage end, there is some likelihood that potash prices will drop some later in the growing season.
For row crop farmers in the U.S. the supply and price for fertilizers for the 2012 season is about normal, or as one North Carolina cotton farmer quips, “It’s normal, about as clear as mud.”