WINNIPEG (Staff) – Fertilizer producers are making good money right now, but they’re not trying to do it off the backs of farmers.
“They’re going to charge what the market will bear,” said Bob Thwaites, a broker with Merrill Lynch in Winter Park, Fla., who has many of the big producers as clients.
First and foremost, Thwaites said prices depend on export demand, especially from China. Almost two-thirds of U.S. production is exported.
“The domestic market is important, but it only happens twice a year, the spring and the fall, and that only counts for one-third of production,” he said.
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“The rest goes to export and that’s what drives the prices.”
Make some, lose some
Thwaites estimated the producers are making more than $50 (U.S.) per ton right now. However, he noted several years ago, the producers were losing about $25 (U.S.) per ton.
Thwaites said other players in the fertilizer chain make much smaller margins.
Will Talbert, with DeBruce Fertilizer in Kansas City, Mo., said fertilizer prices are “soft and softening,” particularly in the southern plains.
But he added the northern plains is an untested market so far. He said prices should come down a bit as farmers start to get on their land. And if the planting season isn’t as good as anticipated, they may come down a bit more.
John Malinowski, sales and marketing manager with J.R. Simplot in Brandon, Man., said it’s hard to predict what fertilizer prices will do in the short and medium terms.
“There’s one sure thing,” he said. “Fertilizer prices will come down, there’s no question about it. I think the really unfortunate part is they’re going to follow grain down and I think everybody’s better off with everything being at a price where people can make money.”
