CHICAGO (Reuters) — U.S. farmers will likely use less nitrogen fertilizer this season.
The cost is sky-high even though the price of natural gas, which is the fertilizer’s key ingredient, is down 40 percent from last year.
The reduction in usage should hit corn plantings more than other crops, since nitrogen is the key booster of corn yields.
“What we’re seeing this season is a reduction in rates,” said Ray Carpenter, senior vice-president of agronomy for Farmers Cooperative in Ames, Iowa, referring to nitrogen bookings.
“Reduced rates mean reduced yield.”
Natural gas prices are around US$2.716 per million BTU, down from $4.536 last year.
However, the price of anhydrous ammonia, a popular nitrogen fertilizer, remains high, around $650 to $700 per ton.
This is because fertilizer inventories remain thin due to shipping backlogs last year and because the industry is controlled by a few big players.
“The reality is input costs don’t come down as fast as the break-even price,” said analyst Sterling Liddell of Rabobank.
Crops require nitrogen, potassium and phosphorus, with corn the single biggest user of those nutrients. It takes roughly one pound of nitrogen per acre to yield one bushel of corn.
Crop specialization has made corn acres increasingly dependent on nitrogen as U.S. farmers grow it year after year.
“I don’t want to over-spend,” said Iowa farmer Mark Recker, who will begin field work soon.