Fertilizer prices to level off before spring rally

Many Canadian farmers have already booked 
at attractive prices last fall

North American fertilizer prices have been on the rise over the past month, but are expected to level off until the spring, when the market should see a seasonal rally, said Rick Rempel, vice-president of marketing for Western Canada with Agrico Canada Ltd.

He said tight supply had contributed to the increase. “The supply of (fertilizer) has been disrupted by less imports into the U.S. and some minor production issues at some of the plants,” said Rempel.

Nitrogen and phosphate prices have both been rising, but are expected to drop off ahead of the spring, said David Asbridge, president and senior economist with NPK Fertilizer Advisory Service in Missouri.

“Nitrogen prices, we expect them to kind of calm down a little bit to drop off a few dollars and then kind of drift along,” Asbridge said. “And then start a seasonal rise into the spring season, probably the end of February, first of March or so.”

Phosphate prices are also expected to see a drop before seeing a slight rally in the spring, as supplies are expected to be more than adequate by the time farmers are ready to apply them to their fields.

“There’s plenty of product out there, it just doesn’t happen to be right here right now,” Asbridge added. “And, of course it’s only the middle of January, we can’t use it anyway.”

Many Canadian farmers have already covered their fertilizer needs for the upcoming spring because prices were attractive this past fall.

“There might be anywhere from 25 per cent to maybe 40 per cent, that still has to be purchased,” Rempel said. “It depends on the location, and a few other factors.”

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How much supply there are in North America in the coming months and where prices move this spring will also depend on the weather, Asbridge said.

“If it’s a season like 2012, where farmers in the U.S. were actually out putting fertilizer down in January and February, which is extremely unusual, then we could see a lot of upward pressure on prices,” he added.

Logistics issues may also arise and cause some shortages of certain products. In the U.S., the upper Mississippi River could remain frozen longer than normal, Asbridge said.

In Canada, the backlogged grain handling system, due to the large crops produced in 2013-14, may also be problematic.

“It could become a little bit of an issue on the supply side. How much of an effect it will have, I guess it’s too early to tell,” Rempel said.

About the author

Columnist

Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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