Fertilizer price/supply situation

Supplies of nitrogen (N) fertilizers, as well as phosphorus (P) and potassium (K) fertilizers, are very tight now throughout the U.S. and Kansas. In fact, it is currently very difficult to purchase fertilizer N for winter wheat topdressing and/or this spring’s row crops unless the supply has already been lined up – regardless of what the posted prices are.

            The tight supply situation applies to all the main N fertilizer sources – UAN solution, urea, and ammonia - as well as other P and K fertilizers. Fertilizer prices are continuing to increase and supplies will likely remain very tight for the foreseeable future. Therefore, producers should keep in close contact with their fertilizer supplier in order to line up their anticipated fertilizer needs. Waiting until it is time to apply crop nutrients to make arrangements for fertilizer needs could leave producers on the outside looking in.

            Why the sharp increase in price and accompanying fertilizer N shortage? This is not a sudden development. Unprecedented market forces have markedly changed the fertilizer industry over the past decade and this has set the stage for the current supply/demand imbalance and resulting high prices.

            Over the past decade, much of our U.S. fertilizer N manufacturing capacity has shut down in the U.S. as a result of sharp increases and fluctuations in natural gas costs, lower-cost foreign competition, domestic environmental regulations, etc. In most cases, the domestic fertilizer manufacturing plants that have ceased operations will likely never come back on line despite the current higher fertilizer N prices. And it is unlikely that new manufacturing plants will be built, considering the strict environmental regulations and volatile natural gas prices that would affect the construction and operation of any new manufacturing plant.
            As a result, more and more of the domestic supply of N fertilizer is now imported from countries in the Middle East, South America, the former Soviet Union, and other low-cost natural gas areas. Over 50% U.S. fertilizer N supply is imported annually – and our dependence on foreign imports continues to increase. Also, global demand for this supply of fertilizer N continues to increase, especially in countries such as China and India with rapidly expanding economies. This tightening of global supply/demand affects the availability and price fertilizer-N in Kansas and the U.S.

            The basic raw material of most N fertilizer production is natural gas. Natural gas is the source of hydrogen needed to make ammonia (NH₃). The main exception is the N fertilizer production facility located in Coffeyville, Kan., which uses a by-product of the oil refining process as its source of hydrogen. The demand for natural gas, the price of natural gas, and the volatility of natural gas prices have all increased in recent years - which has eventually made it more difficult for American agriculture to obtain needed supplies of N fertilizers.

            Additionally, several unscheduled maintenance shutdowns at remaining U.S. production facilities have added to recent tightening of supplies.

Unfortunately, producers can do little about this situation except keep in constant contact with their local fertilizer supplier and commit to needed products as soon they know what their needs are. Prices for N and other fertilizers are high, but supply may be an even greater concern right now.

            There are already sound agronomic reasons for not waiting too late to make wheat topdress applications on most of our non-sandy, well-drained soils in Kansas. The possibility being unable to locate a supply of fertilizer N later in the season adds an additional reason for making wheat topdress decisions early.
-- Dale Leikam, Kansas State University, Nutrient Management Specialist

NorKan Dry Fertilizer Plant
Concordia, KS

James Peter (standing at right), Farmway Co-op's Clay Center Crop Production location manager,  welcomes guests to the Avail/NutriSphere-N meeting held at the Clay Center Methodist Church.

Jericho Hammond (seated) Clay Center Crop Production bookkeeper, visits with producers as the register for the Clay Center meeting held in March. Approximately 50+ producers from Clay Center, Miltonvale, Leonarville and surrounding areas were in attendance at the meeting.