Winnipeg, Feb. 9 – The relatively cheap price of natural gas has helped push down fertilizer prices for Canadian farmers over the winter, but that should change by spring.
One Manitoba farm leader noted urea fertilizer that cost C$545 per tonne last August now can be acquired for $445 per tonne.
“Phosphate fertilizer was going for $721 per tonne in August, now it’s $692,” said Dan Mazier, president of Keystone Agricultural Producers.
While lower, fertilizer prices have not dropped as much as the prices of major crops, he said.
“Prices haven’t softened anywhere near to what the crops have softened,” he said.
Still, he expects usage to remain relatively unchanged for this crop year.
Mazier said fertilizer is one of those things you “don’t cut back on too much,” unless you’re growing a crop of lesser value.
A fertilizer expert south of the border agrees natural gas is contributing to the downward price pressure on fertilizer, as is supply and demand pressure.
“Most of the world’s fertilizer, particularly nitrogen, is based on natural gas,” said David Asbridge, president and senior economist of NPK Fertilizer Advisory Service in Missouri.
He says the market is supply-driven right now, and will take two to three years to stabilize.
While Chinese fertilizer producers on the coast are able to compete right now, companies further inland are having trouble and have scaled back their activity.
“So the supply is beginning to get a little more limited and we think that again, over the next two to three years it will pull prices back up into a new cycle,” he said.
In the short-term, he believes nitrogen prices have “just about bottomed out” in North America.
Some products, like urea, are at price levels not seen since 2007, he said.
However, as spring approaches farmers in the southern U.S. will begin to buy, followed by those in the U.S. Midwest, and eventually Canadian farmers.
“We’re expecting to see prices (U.S. market) across the board get stronger between now and the end of March to mid-April. That typically will be the peak for fertilizer prices. The western Canadian market should reflect that,” Asbridge said.
He adds the value of the Canadian dollar will also affect prices.
“But that’s really more for phosphate because they make a lot of nitrogen in Canada and produce a lot of potash in Canada,” he said.
