Fertilizer and Fuel Outlook Positive for Year Ahead


by Russ Quinn DTN Staff Reporter

OMAHA (DTN) — Global fuel markets' oversupply and a drop in fertilizer demand are helping push input prices lower for farmers this year.

Retail fertilizer prices fell slowly in recent months because of lower commodity prices. Prices tracked by DTN show fertilizers started this year down from a year earlier.

For the last week of January 2016, 10-34-0 was 2{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e} lower compared to last year. All the rest were down double-digits: DAP by 13{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e}, MAP 14{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e}, UAN32 15{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e}, UAN28 17{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e}, and potash, urea and anhydrous all by 20{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e}.

Despite the lower prices, farmers are looking at how they can cut back on fertilizer or be more efficient because of tighter profit margins this year. The big question is how much will farmers cut back.

Paul Bruett, an agronomist with BB&P Feed & Grain located in Winterset, Iowa, saw some farmers cut fertilizer applications in the 2015 growing season. However, generally, most farmers applied the same fertilizer levels for N-P-K as in recent years to prevent any yield declines due to insufficient nutrients, he said.

“However, this may change in 2016,” Bruett told DTN.

He said many farmers have built up P and K levels in their soils over the last five years and some may decide to forego applications or, at the very least, apply maintenance levels.

“Farmers are going to cut back where they can in an attempt to stay profitable. They will be seriously looking at all areas, but (particularly) fertilizer application, land rent and machinery,” Bruett said.

Clarke McGrath, an Iowa State University Extension area agronomist located in Harlan, Iowa, said he believes overall fertilizer tonnage will be down in 2016 with farmers tempted to cut back, particularly on P and K. The weather was not cooperative for applying much fertilizer this fall and some farmers decided to not apply as much fertilizer.

“Overall around here, fall P and K tonnage was probably down 10{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e} to 15{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e} or so,” McGrath said. “Part of this we'll catch up on this winter and early spring, so I think we will end up down on P and K around 5{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e}.”

McGrath thinks most farmers are strategically dropping P and K applications, based on nutrient levels shown in soil tests on their fields; however, growers need to understand that this is only something they can do for a year or two before fertilizer levels in the soils begin to fall, he said.

Despite concerns about costs, farmers still need to purchase fertilizer to maintain yields.

Farmers like Jamin Ringger have already pulled the trigger. The Gridley, Illinois, grain and hog farmer purchased some of his 2016 nitrogen fertilizer last August.

He already bought his UAN 28{f75e9bc95454961d27ea60375533d5bd3793c6b31aa68057771d9b5363a8de8e} for spring. “We had a good opportunity in September to lock some in if we hauled it by October,” Ringger explained.

He also purchased DAP at $510 per ton and potash at $390 per ton to fall apply on his central Illinois fields. Most of his P and K are distributed as liquid manure from his hog operation.

He didn't buy any fertilizer since last fall as prices have slowly gone down in recent months; he remains in a holding pattern and watches retail prices closely. “Hopefully we will have some more priced before planting,” he said.


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Source:  DTN/The Progressive Farmer



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