Fertilizer prices will come down this year but at a slow pace

Fertilizer and other input shortages were a big topic of conversation last year. Economists with the Fertilizer Institute say the 2022 supplies were a little lower than normal, but they suggest some misunderstandings could have caused more concern than necessary.

The Fertilizer Institute says when it comes to supply, nitrogen was at some of the highest the U.S. has seen in recent years.

“When we look at things on a U.S. basis, we actually had the second-highest total supply of nitrogen over the last eight years. We were down a little bit in terms of phosphate, and we were basically at the five-year average for potash imports. So, although there was maybe quite a bit of noise around there, I think supplies ended up being pretty good last year, and we anticipate that moving into this year,” said Jason Troendle.

They suggest some of the problems last year may have had to do with misunderstandings between producers and retailers.

“The grower would go to their retailer in December and say, ‘Hey, can I purchase my ammonia for April 20 delivery,’ and the retailer would say no, and sometimes that was interpreted as the product wasn’t available. And really, what it was is with the prices being so volatile, the retailer wasn’t willing necessarily to price something out that far in advance. So, I think we may see some of that challenge again this year, just in terms of retailers and farmers trying to mitigate risk and not necessarily wanting to put something on the books with as volatile as the market is.”

TFI Economist, Jason Troendle says the group does not see the availability of inputs as a problem this year. Price, on the other hand, is a different story.

“At this point in time, we don’t see or foresee any widespread shortages across the U.S. in terms of availability of fertilizer. Prices, of course, may be higher than what growers would like to pay for them, but availability, we don’t think, will be a major issue.”

While input prices have softened, Troendle says they are not coming down quickly.

“There’s a phrase that says things go up quickly and take a lot longer for them to come back down. But I think it’s good news is even as we’re going into the spring here, we have seen some softening in prices. I think both in terms of on the potash side and the phosphate side, we’ve seen things have been coming off for quite some time now, slowly trickling downwards. And then, even on the nitrogen side, we’ve seen some downward pressure over the last month or two here.”

This week, all eight major fertilizers are lower in price, marking the third straight week of lower fertilizer prices.

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