Time to buy fertilizer is now
According to a piece featured this week in AgriMarketing Magazine, the time to buy fertilizer is now, with a 'floor' on prices likely having been reached already.
August 19, 2009 By AgriMarketing Magazine
August 17, 2009 – Our philosophy has always been that you sell a commodity when you think prices are done going up, not necessarily because you think the value of the commodity is going to drop a great deal. The same principle applies to buyers of commodities -including fertilizer and fuel. You should cover upcoming needs when you think the market is close to a bottom and not think about how much prices might rebound.
With that said, we believe now is the time to start booking upcoming fertilizer needs.
Here's a summary of what has happened to fertilizer prices over the past year in the middle of the Corn Belt:
- Ammonia has gone from $1,080 to $325 per ton.
- Urea prices have dropped from $880 to $315 per ton.
- DAP has gone from $1,120 to $300 per ton.
- Potash prices have declined from $900 to $550 per ton.
Fertilizer prices have not only dropped substantially from year-ago levels, in most cases they are below the five-year averages. This collapse of the fertilizer market from last year's astonishingly high prices was caused by a combination of oversupply and the big drop in demand that was the result of sky-high prices.
Regardless of what happens to grain prices, fertilizer demand will rebound for next year's crop. Many farmers reduced or eliminated some fertilizer applications this year due to excessively high prices. Few will cut this corner two years in a row.