Agrium Confirms the Fertilizer Perfect Storm

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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.

Categories: Fertility

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