Fertilizer Pipeline to Prairies Off to Strong Shipping Start

The odds of a fertilizer shortage in Western Canada this upcoming spring are lower than they were last year,  according to a Saskatchewan-based sales manager for fertilizer manufacturer Yara Canada.

“We’re off to a good start. We’ve actually had record Q1 shipping of all products in Western Canada,” explains Dean Anderson in the interview below, filmed at Farm Forum in Saskatoon earlier this month.

He notes the supply situation is much more comfortable than it was a year ago.

“At this time last year I was quite negative in terms of whether we’d be able to ship enough fertilizer in time to have sufficient volume for everybody. What happened was we had record winter shipping, but also a later spring start, and there was a lot of fertilizer that arrived by rail just in time,” he says. “For the vast majority of growers they didn’t know how close it was, but it was really close. The good thing is we’re starting this year much better.”

Shipping numbers for the first quarter of 2014, which ran from July 1st to September 30th, were around 20 percent higher than last year, he says.

“If we keep up the momentum, I think supply will be in good shape,” says Anderson.

That doesn’t mean prices won’t spike again in spring, as there are several other major factors also influencing values for the major nutrients. While oil prices have dropped off, fertilizer prices have tended to follow the corn market in recent years.

“Corn drives everything. A 10 percent increase in corn acres affects fertilizer usage by 5 to 10 percent,” he explains. “They say 40 percent of all nitrogen goes onto corn. 37 percent of phosphate and potash goes on corn. Any shift in corn acres affects supply, which affects prices positively or negatively,”

For Canadian farmers, the decline in the value of the loonie versus the U.S. dollar is also moving prices higher. The Canadian dollar had dropped by 6.1 cents from July 1st to when this interview was filmed, which Anderson says resulted in urea prices north of the border rising by $33 to $34 per tonne.

“At these price levels, for every one cent drop, the urea price, and probably phosphate, will go up about $5.60 a tonne,” says Anderson.

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