Farmers have seen little softening of retail fertilizer prices but the big thaw could be just around the corner.
“They haven’t dropped yet,” said Ian Wishart, president of Keystone Agricultural Producers, a Manitoba grower group that closely tracks input costs.
International urea prices have tumbled to $275 per tonne from summer highs of around $800. Anhydrous ammonia that was selling for $850 per tonne has dropped below $400.
But according to Alberta Agriculture, retail prices haven’t followed suit. The average monthly farm prices of urea, ammonia and phosphate all rose in September compared to August and were much higher than they were a year earlier.
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There are reports of barges filled with cheap urea arriving in Minneapolis and St. Louis but none of that product seems to be making its way into Western Canada, said Wishart. He figures it’s only a matter of time.
“There should be some opportunity in the next couple of months to purchase nitrogen-based fertilizers at better prices,” he said.
“I’m not nearly as optimistic on phosphate.”
Wholesale prices of phosphate have tailed off, but nowhere near as much as the nitrogen fertilizers. The Market, a weekly fertilizer newsletter, said low demand will force prices down further but the slide will be limited by plant closures. It estimates 45 percent of the world’s phosphate export capacity has been shut down.
Wishart believes farmers have not seen the trickle-down effect of lower wholesale fertilizer prices because dealers have bins full of expensive product and they are not getting any breaks from manufacturers.
“There is some pressure for them to maintain their current prices because the minute they start selling cheaper fertilizer, then all that stuff in the bins just lost value.”
Bethany Yewsuk, crop input adviser with Mid-Sask Ag Services Ltd., a Saskatoon fertilizer dealer, said that analysis is bang-on.
“We stocked up on all this fertilizer. We bought it at the high, high price,” she said.
Retailers like Mid-Sask are handcuffed by that expensive inventory.
“We can drop prices but it’s not going to be near the amount people are expecting,” said Yewsuk.
Wishart figures retailers will eventually get their hands on cheaper nitrogen fertilizer and blend it with their higher priced inventory to arrive at more acceptable prices, although he noted ammonia doesn’t flow back and forth across the U.S. border because of differing trucking safety regulations.
Because of the border issue, he doesn’t believe ammonia prices will fall as far or as fast as urea, but the two competitive commodities can’t get too far out of line with one another.
Yewsuk said retailers will likely start blending once cheap product becomes readily available.
That may be sooner rather than later, said Karla Bergstrom, a grain and oilseeds economist with Alberta Agriculture. She said there are unconfirmed reports of cheap offshore nitrogen fertilizer arriving in Canada.
Bergstrom has been told that Farmers of North America and a group of five Hutterite colonies have five cargoes of urea sitting in Montreal waiting to be tested and inspected.
Another shipment of nitrogen fertilizer has reportedly made its way to the Peace River Seed Co-op Ltd. in Rycroft, Alta.
She has heard of prices for the new product that range from $450 per tonne north of Edmonton, which sounds “too good to be true,” to $750 per tonne f.o.b. Saskatoon.
“I’m thinking it’s just the beginning,” said Bergstrom.
Glenn Caleval, vice-president of Farmers of North America, said his company has imported two shipments of nitrogen fertilizer.
One is a boat of ammonium nitrate brought in through the Port of Churchill. The other is a shipment of urea, but he wouldn’t divulge the quantity or location of that one for competitive reasons.
FNA plans to sell the fertilizer to its members at prices similar to what local dealers are offering. Members would later receive a participation premium reflecting the savings on product and distribution costs.
By doing that, the company feels it can disguise the price of its product from the competition.
Caleval said there is no way it will be selling urea at $450 per tonne. But it will be priced below the $800 per tonne he expects will be the going rate in the traditional dealer network.
