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WSJ: Fertilizer Prices More Than Doubled Over Past Year

Wall Street Journal writers Patrick Thomas and Kirk Maltais reported in Thursday’s paper that, “Fertilizer prices have more than doubled over the past year, frustrating U.S. farmers, who now are adjusting spring planting plans and warning about the potential for higher food prices.

“Surging Fertilizer Costs Push Farmers to Shift Planting Plans, Raise Prices,” by Patrick Thomas and Kirk Maltais. The Wall Street Journal (December 15, 2021).

A global shortage of the chemical ingredients used to make fertilizer, widely applied to soil to boost corn and wheat yields, has sent fertilizer prices soaring. Escalating costs are leading some farmers to shift acres toward less fertilizer-intensive crops, like soybeans, while others said they plan to cut back on their overall fertilizer use, potentially reducing future harvests.

Lower grain production could translate to higher prices for farm commodities like corn, analysts and farmers said. They added that higher costs for such commodities would further inflate prices of pantry staples like cereal and cooking oil, as well as beef and other meat, because producers rely heavily on grain to feed livestock and poultry.”

Thomas and Maltais explained that, “The rise in fertilizer costs is partly fueled by elevated natural gas prices, a key ingredient for nitrogen-based fertilizers, as well as by severe storms in the U.S. that disrupted fertilizer plants earlier this year and a move by China this summer to ban exports of phosphate, a major fertilizer component. Some farmers also blame fertilizer companies for the rising prices.”

The Journal article added that, “Kenneth Zuckerberg, lead grain and farm-supply analyst with agricultural lender CoBank, said many farmers are locked into planting plans for next year, and current prices may still make corn more profitable than soybeans, even with higher fertilizer expenses.”

Also this week, in an update from the American Farm Bureau Federation, “Too Many to Count: Factors Driving Fertilizer Prices Higher and Higher,” Shelby Myers and Veronica Nigh stated that, “Unfortunately, the fertilizer sticker price farmers in some areas are reporting is up more than 300% and delivery times are anyone’s best guess.”

“Too Many to Count: Factors Driving Fertilizer Prices Higher and Higher,” by Shelby Myers and Veronica Nigh. American Farm Bureau Federation- Market Intel (December 13, 2021).

The Farm Bureau report noted that, “All major crop production nutrients have experienced increased prices when compared to September 2020: ammonia has increased over 210%; liquid nitrogen has increased over 159%; urea is up 155%; MAP has increased 125%; DAP is up over 100%; and potash has risen above 134%.”

Meanwhile, Reuters writers Victoria Klesty and Nora Buli reported on Wednesday that, “Yara has brought most of its European ammonia production back on line after prices of finished fertilisers rose to make up for a surge in the cost of gas, the Norwegian fertiliser manufacturer said on Wednesday.

“The company cut back ammonia production at a number of sites in Europe from September through November following a jump in the price of the natural gas used in the manufacturing process, hitting its overall output in the region by 30%.”

“Yara brings most European ammonia production back on stream,” by Victoria Klesty and Nora Buli. Reuters News (December 15, 2021).

The article noted that, “As a result of supply constraints, farmers in Europe have scrambled to buy urea and liquid nitrogen at elevated prices for fear of running short in the planting season.”

Keith Good Photo

Keith Good is the social media manager for the farmdoc project at the University of Illinois. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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