WINNIPEG — The relatively cheap price of natural gas has helped push down fertilizer prices for Canadian farmers this winter, but that should change by spring.
Keystone Agricultural Producers president Dan Mazier said urea fertilizer has dropped to 445 per tonne from $545 per tonne in August.
“Phosphate fertilizer was going for $721 per tonne in August. Now it’s $692,” he said.
However, he also said fertilizer hasn’t copied the price movement seen in grains and oilseeds.
“Prices haven’t softened anywhere near to what the crops have softened,” he said.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Still, he expects use to remain relatively unchanged this 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.
David Asbridge, president and senior economist of NPK Fertilizer Advisory Service in Missouri, said natural gas is behind a lot of the downward pressure on fertilizer.
“Most of the world’s fertilizer, particularly nitrogen, is based on natural gas,” he said.
The market is supply-driven right now and will take two to three years to stabilize, he added.
Chinese fertilizer producers on the coast are able to compete right now, but 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, such as urea, are also at price levels not seen since 2007, he said.
However, farmers in the southern United States will begin to eat into supplies as spring approaches, followed by producers in the U.S. Midwest and eventually those in Canada.
“We’re expecting to see prices across the board get stronger between now and the end of March to mid-April,” Asbridge said.
“That typically will be the peak for fertilizer prices. The western Canadian market should reflect that.”
The value of the Canadian dollar will also affect prices, he added.
“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.
