Agrium Confirms the Fertilizer Perfect Storm

There are signs developing which indicate much higher fertilizer prices come this spring. The biggest being last weeks announcement to halt production at Agrium’s Ft. Saskatchewan production facility. As expected the pipeline is full due to lower purchases by farmers this fall as they waited for lower prices. It really feels like the perfect storm is building this spring for much higher fertilizer prices. In its press release Agrium stated….

CALGARY, Alberta — Agrium Inc. announced today that it has shut-in production at its Fort Saskatchewan nitrogen facility and has further curtailed production at other major nitrogen and phosphate plants in North America. The temporary curtailments are necessary due to a significant build in North American fertilizer inventories and declining available storage capacity.

We are now in the old western standoff that really we have feared. I am now going to repeat something that I do not want anyone to forget………”If you have not bought any fertilizer for the 2009 growing season….Start buying in increments.”

I am not suggesting that you should buy all your needs but there is a strong argument that we may have seen the lows of the 2009 growing season. Fertilizer prices have busted lower in comparison to the 2008 spring price. In a recent story by Marcia Zarley Taylor, DTN Executive Editor, she quoted Mike Rahm, a vice president for fertilizer manufacturer Mosaic who…”confirmed the fertilizer [fall price] bust. Normally, Illinois growers apply 60 percent of nitrogen needs in the fall. But one warehouse in the state had only sold 15,000 tons so far, when they typically sell 60,000 to 90,000 tons in the same period, he said.”

The fall of the urea price is reality but be very careful of what is ahead for spring. I know that crop prices have gone down and you feel a bit jaded by input prices staying relatively higher but the reality is that making good business decisions should not be overshadowed by the fact you are frozen with pricing anxiety. Remember that buying in increments is not bad management.

6 thoughts on “Agrium Confirms the Fertilizer Perfect Storm

  1. I think that fertilizer prices will be higher but I think that people are not paying attention to how short of money the farmer really is. Not everyone was lucky enough to sell all their canola at $15

  2. If fertilizer companies want to sell their product its an easy solution. Bring their prices in line with 4$ wheat,3$barley,8$canola,and so on and so on. Many farmers and dealers have already been burnt by ridiculous prices!

  3. If the fertilizer companies don’t start paying attention to their obvious price fixing marketing; the customer base for their product will be gone. Young farmers such as myself, are not going to be interested in a job with high imputs and minimal returns. Sorry, you are not big oil, we just won’t be spreading!
    Get the price back inline or start looking for work!

  4. Fertilizer prices should be alot lower than what they are. The world is going into one of the worst recessions its ever seen bringing all commodities down, yet nitrogen & phos still remain at relatively high levels.

  5. there is a way out,do relatively small plot trials of crop practices and see if that work and apply it on the larger scale to minimise the risk of spending higher cash for fertilizers with minimal returns,the fertilizer companies wont get out of job,farmers will always want it anyway

  6. Leaving 80-100 foot wide test strips in the field can be a great way to test if differing fertilizer, seed and chemical rates are effective. and help you determine the best way to spend you bucks.

    It does require a yield monitor in the combine, or alternatively combining the test strips separately and weighing them using a weigh wagon, or a local scale. A combine yield monitor makes it really simple, I would have a much much harder time managing the imputs on my farm without it.

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