Fertilizer prices, now and into spring

Timing fertilizer purchases is a guessing game. Here’s one expert’s take on the issue

The time to buy fertilizer is now, if you don’t have enough stored up on the farm. December and January, if you look at numbers from the last ten years, is the best time to buy fertilizers if you have the resources and space, says Todd Bergen-Henengouwen, project assistant at Alberta Agriculture and Forestry, because that’s when prices tend to be at their lowest. It’s common to see prices increase as we move into March, April, and May because that’s when demand starts to get higher. Prices can start to creep up even as early as February, says Bergen-Henengouwen, because even though farmers in the prairies aren’t seeding yet, those down south in the United States are.

Now that we know the overall trend, where are prices at the current moment for the two most prominent types of fertilizers, the nitrogen-based (ammonia and urea) and the phosphorus-based products? When I spoke to Bergen-Henengouwen on January 6, 2015, the provincial price averages for Alberta (rather than for any particular retailer) were as follows: phosphorus was at 11 51 0 (the first number is the percentage of nitrogen, the second number is the percentage of phosphorus, and the third number is percentage of potassium) and the average price for this product was $807 per tonne. For urea, at 46 0 0, the average price was $551 per tonne. For ammonia, at 82 0 0, the average price was $944 per tonne.

“Nitrogen-based fertilizers are currently below 5-year averages,” says Bergen-Henengouwen, while “phosphorus-based fertilizers are above average.” The nitrogen-based fertilizers are lower in price partially due to the “lower oil and natural gas prices than we’ve seen historically, as well as the lower commodity prices,” says Bergen-Henengouwen. Since natural gas is a major feedstock for nitrogen fertilizers, the fact it’s low means that the cost of producing nitrogen-based products falls. Fertilizer prices tend to follow the price of corn, says Bergen-Henengouwen, because if corn is selling really high farmers will want to grow as much as possible, but when the price of corn is lower then people will skimp a bit on fertilizer on their corn crops because it’s too expensive. Here in the prairies, where canola is a huge crop, Bergen-Henengouwen has looked at the price of urea divided by the price of canola over the last 10 years and found that right now we’re just below the 10-year average in terms of the nitrogen-based fertilizers and just above the 10-year average for the phosphorus-based fertilizers, which means that, relatively speaking, phosphorus-based products are a little more expensive and nitrogen-based products are a little less expensive, based on what farmers have been able to sell canola for.

Part of the reason that the prices of phosphorus-based products are a bit higher at the moment is because “phosphorus is brought in from outside of Canada,” so the United States-Canadian exchange rate, with the current Canadian dollar being so low, plays a role. Additionally, demand for phosphorus-based fertilizers have also been higher in the last year, which has also driven up the price. Some good news, says Bergen-Henengouwen, is that phosphorus prices out of New Orleans have been falling in the last two months, so there’s the hope that that decrease will filter down into our local markets.

Ammonia and urea are most often used on the farm, while phosphorus is secondary, though it’s still vital to plant growth, says Bergen-Henengouwen. With the current high phosphorus prices, then, some farmers might make the choice to reduce the usage of the phosphorus-based fertilizers while prices are running high. Though the 10-year trends are known, it’s really hard to definitively predict what prices will be at any given point in the future. But Alberta Agriculture and Forestry keeps the most up-to-date information on their website under the Alberta Farm Input Monitoring System. Check out the page here where you’ll find, in addition to current fertilizer prices and prices from the last five years, average prices for feed, farm machinery and other common expenses.

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