Winnipeg — Prices for nitrogen fertilizer and potash have weakened during the first half of 2015, but according to an industry analyst, the relationship between fertilizer prices and agricultural commodity prices is pretty much in line with the 10-year average.
“I think we’ve seen some stabilization in fertilizer markets of late which is promising,” said Andy Jung, the director of market and strategic analysis with The Mosaic Company in Minneapolis.
He noted the fertilizer market has stayed relatively calm despite recent crashes in financial markets and wild swings in the price of crude oil. However, at the same time he points out the devaluation of a number of currencies has put fertilizer import economics under strain in some geographies and likely contributed to some downward pressure on fertilizer prices in the past couple weeks.
The price for fertilizer has been generally rising in Canada since last fall when the loonie began its descent relative to the U.S. dollar.
However, Jung noted, that in US dollars, fertilizer prices are actually down from 2014.
“They’re down from a year ago; a rough average of 10 percent,” said Jung, adding that while the Canadian farmer was paying more for fertilizer than a year ago, technically, he was getting a better exchange rate for his grain.
“It’s an inverse relationship with a number of moving parts,” he said.
When it comes to affordability, fertilizers are still in line with their historical norms relative to prices for corn, soybeans and wheat.
The affordability metric for particular nutrients is somewhat different though.
According to information supplied by Jung, prices for nitrogen are relatively cheaper than average, potash prices are right in line with the historical ratio while phosphate prices are generally less affordable relative to the historical average.
Supply issues in a number of different countries and areas are impacting production in 2015.
So far, availability hasn’t been an issue but that could change once harvest begins, said Jung.
“If farmers delay purchases for too long there’s a big rush in season once the crop is off the field and you’ll get these localized shortages,” he said.
However, with most crops coming off the field earlier than usual, the chances of that don’t appear to be great.
One things producers should watch though, is the yields that are coming out of their land, said Jung.
“Whenever you have a decent year for yields, you know you had a pretty significant draw on nutrition in the soil, which must be replaced or it will become a limiting factor,” he said.