Analyst Says Fertilizer Prices Have Likely Peaked

Rising grain and commodity prices are boosting fertilizer demand.

“With prices for corn, soybeans, wheat, and canola all going higher, guys have been more apt to buy fertilizer, and we should see more of it on the land this year,” said David Asbridge, president and senior economist with NPK Fertilizer Advisory Service in St. Louis.

Producers cut back fertilizer use in the last couple of years as grain prices were not nearly as strong as they are now, noted Asbridge.

North America isn’t the only part of the world expecting to see an increase in fertilizer use in 2011. Demand has been strong in developing agricultural markets, including Brazil, China, and India. These developing markets account for about two-thirds of global consumptions annually.

However, even with the increased global demand, Asbridge said he doesn’t expect prices to go up much at all, stating the increase has already happened.

Most producers have already purchased the fertilizer they’ll need in the spring, and the majority of that was purchased last fall, said Asbridge. He noted that was also when fertilizer values went up.

If anything, fertilizer values may decline slightly in the spring, he predicted. Asbrige said he feels they are due for a setback, and spring, when producers are busy planting their crops, may be the time that will happen.

However, he said to expect fertilizer prices to be heavily influenced by grain prices, as they were when commodity prices gained strength during the second half of 2010.

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