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Stability Returns To Fertilizer Prices

Farmers can expect reasonably stable fertilizer prices over the next few years – a welcome break from the wild price swings during the previous two years, according to a U. S. industry analyst.

The price of fertilizer is expected to increase moderately this spring as markets return to normal. But huge price gyrations which happened in 2008 and 2009 are not in the cards this time, David Asbridge told the GrainWorld conference in Winnipeg.

“(Farmers) shouldn’t expect any kind of volatility like we’ve seen in 2008 and 2009. But I think that we will still have an opportunity to see higher prices between now and the peak that we’re expecting in the spring,” Asbridge said after speaking to the Canadian Wheat Board’s annual outlook conference Monday morning.

Fertilizer markets went on a wild ride when commodity prices soared in 2008. But fertilizer prices crashed in 2009 as the world recession took hold. Demand plunged and prices took a nosedive.

Prices have increased in the last two months, thanks to a return to higher demand and a “relatively good” control of inventories by manufacturers, said Asbridge, president of NPK Fertilizer Advisory Service in Chesterfield, Missouri.

But he did not foresee a return to volatile price patterns.

“The peak of this spring’s prices will probably be a fairly good indicator where we’re going to go,” he said. “I really don’t see anything coming up that’s going to make prices go back again to the highly volatile period like we’ve seen in the last couple of years.”

Asbridge said he’s advising U. S. farmers to lock in 75 to 80 per cent of their fertilizer requirements ahead of higher prices this spring. Canadian prices have moved up a little faster than U. S. prices and may not have as far to rise, he acknowledged.

Nitrogen fertilizer is expected to see the biggest price increase. Asbridge said U. S. urea and ammonium nitrate (UAN) prices could rise by 32 per cent because of low inventories and a large U. S. corn crop expected this year. He predicted total U. S. fertilizer demand will grow by nearly 24 per cent in 2010, driven mainly by corn and soybeans.

Phosphate prices are expected to rise moderately but potash may stay relatively stable, Asbridge said.

Canada’s total fertilizer shipments took an eight per cent drop in 2008-09, led by potash (down 47 per cent) and urea (down 15 per cent). However, total shipments are recovering and expected to grow by nine per cent in 2009-10, Asbridge predicted.

“Things are fairly normal in Canada again,” he told his audience.

Asked during a question period why higher fertilizer prices are good news for farmers, Asbridge said they encourage manufacturers to develop new mines and increase their capacities. [email protected]

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