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Nitrogen prices may come down slightly this fall before going back up again for winter, Braum predicts. “So it might be a smart decision to make fall anhydrous applications in areas where you're able to do so [responsibly],” he says. “New capacity is being built and coming online for nitrogen, but it probably won't be available before winter or beyond.”
Potash and phosphate prices will likely weaken more than prices for nitrogen this fall, but not a lot more, Braum adds. “There's not any new capacity coming online for potash,” he says. “The same is true for phosphate. And demand will likely stay high, especially with the increased corn acreage and ethanol situation.”
The international markets for potash are still very strong, Dillier agrees. “I don't expect much decrease in potash demand this fall,” he says. “If anything, it might increase.”
The phosphate market is also strong, Dillier adds, but the industry has begun to make a switch from diammonium phosphate (DAP) to monoammonium phosphate (MAP). “MAP is easier for phosphate producers to make, so it's cheaper now,” he explains.
Summer fertilizer shipments should be timelier than they were this spring, says Kim Polizotto, chief agronomist for PotashCorp, Greenfield, IN. “Some of the things that caused problems are settled now,” he says. “For example, a railroad strike during the fertilizer season slowed potash shipments earlier this year, but I don't expect any more problems like that.”
However, if any major hurricanes, like Katrina, were to hit the Gulf Coast this summer or fall, the industry would “be in another mess,” Polizotto says. “Ag retailers should take advantage of summer fill-up programs to replenish their fertilizer stocks prior to this fall. If they wait too long to do that, they increase the risk of either a tight supply or transportation problems that might leave them short of material when they need it.”
Transportation troubles
The fertilizer industry often faces many challenges in moving its products, confirms Harriet Wegmeyer, director of communications for The Fertilizer Institute. “Rail shipments continue to be the main challenge, particularly in the spring, when volume is high,” she says, “but disagreements over common carrier responsibilities are another problem.”
Railroads are concerned about shipping ammonia fertilizers. “Many of them want to remove themselves from common carrier responsibility to reduce their liability concerns in case there is a derailment and a leak,” Wegmeyer says.
The most recent data available, from 2005, show that there were 52,116 rail shipments of ammonia nationwide that totaled 4.2 million tons. Trucks shipped slightly less ammonia, about 4 million tons, and barges shipped quite a bit less, only 0.9 million tons.
Rail is the safest way to move ammonia, Wegmeyer says. Dillier says it's also the most economical form of nitrogen to use. “Anhydrous ammonia is still a big volume commodity, and its use is staying strong,” he says.
However, reluctant railroad shippers aren't the only potential roadblock to ammonia movement. “There is also a shortage of licensed, qualified and background-checked truck drivers available to haul the product,” Wegmeyer says.
An increased demand for ethanol also has added to the demands for shipping ag inputs such as fertilizer. “With 90 million acres of corn being projected, the nation needs more fertilizer, and much of that fertilizer comes from overseas,” Wegmeyer says.
The fertilizer industry is a global market. “So U.S. farmers are competing with farmers in China and India for fertilizer,” she adds, “and China and India are huge consumers of nitrogen, phosphorus and potassium.”
Much of the natural gas that is used for domestic fertilizer production is also imported. These imports have recently helped to keep fertilizer prices lower than they would otherwise have been. On the other hand, it makes the industry more susceptible to disruptions from Mother Nature.
“Natural gas [and fertilizer] prices shouldn't be going up substantially [in the near future], unless we get a hurricane that disrupts our storage and distribution system,” Swanson says. “And those types of disasters are hard to predict.”
Hurricane season
THE FERTILIZER industry is better prepared for dealing with a devastating natural disaster after experiencing the major disruptions that occurred after Hurricane Katrina in 2005, says Harriet Wegmeyer, director of communications, The Fertilizer Institute.
“Knowledge-wise and planning-wise, we should be better off,” she says. “However, if another major hurricane arrives in the Gulf this year, we're all still at Mother Nature's mercy. We won't know how well we've planned and prepared until another one actually hits.”
Forecasters have been wrong before, but this hurricane season, which runs from June 1 through November 30, is likely to be an active one — more active than the 2005 season, according to Colorado State University (CSU) researchers. For 2007, the CSU forecasters are predicting 17 named storms, nine hurricanes and five intense hurricanes. In 2005, which brought Hurricanes Dennis, Katrina, Rita and Wilma (among others), CSU forecasters predicted 13 named storms, seven hurricanes and three intense hurricanes. The long-term average is 9.6 named storms, 5.9 hurricanes and 2.3 intense hurricanes per year.
An increased reliance on fertilizer imports also may make the industry somewhat more vulnerable to hurricanes now than in past years, Wegmeyer says. For example, she points out that “last fertilizer year was the first time that the U.S. has imported more than 50% of its nitrogen fertilizer.”
Another hurricane near New Orleans in 2007 could again cause damage to coastal infrastructure just as it did when Hurricane Katrina damaged both shipping and natural gas pipeline infrastructure in 2005. After Katrina, natural gas prices — the product from which most nitrogen fertilizers are made — jumped to $16/million Btus. In comparison, natural gas futures were trading for $7.72/million Btus on May 2, 2007.
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Assessment tool
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Atrazine adjustments
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Old habits die hard
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FROM THE TOP
Are you pleased with the acceptance of ESN Smart Nitrogen, and how does that new product fit with retailers and their relationships with their customers?
FROM THE TOP
Tell us about your experience with Syngenta Crop Protection in Latin America and what that experience will mean to your new position here in North America.
Soybean rust confirmed in Georgia
The USDA recently announced that Asian soybean rust has been identified in Seminole County, GA, on volunteer soybeans. This is the first confirmed U.S.
PRODUCTS
New fertilizer grades Honeywell has launched two new grades of Sulf-N ammonium sulfate (21-0-0-24S) and improved quality specifications and supply for
Pollen blocker
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