Many analysts complain about a lack of grain price transparency in Western Canada, but grain prices are readily available compared to pricing information for fertilizer.
Scores of analysts weigh in each day on what’s happening in the marketplace and whether prices are likely to go higher or lower.
By comparison, fertilizer pricing is a black box. What little analysis is published typically talks about American prices or world prices long before the products reach farmers. Sometimes sources don’t even agree on whether prices have been weakening or strengthening.
The only source of public information for retail fertilizer prices in Western Canada seems to be the long-standing farm input price survey conducted by Alberta Agriculture. This is a province-wide price only published once a month, and unfortunately it’s released with little fanfare.
Extrapolating Alberta information to Saskatchewan and Manitoba is no doubt a bit dangerous, but it’s better than trying to make sense of American port prices and what that might mean here in Canada.
According to Alberta Agriculture’s price survey, urea (46-0-0) was about $501 a tonne in May and June of last year. The price dipped slightly in July, but has been increasing every month since. Sometimes the month-to-month increase has been slight; other times it has been as much as $20 a tonne.
The January 2019 urea price is pegged at $570 a tonne. Buying in July could have saved more than $75. For a producer applying 100 pounds of actual nitrogen per acre, the price increase equates to more than $7 an acre. Based on the prevailing trend from previous years, more price increases are likely before seeding rolls around.
At $570 a tonne, the January 2019 price is nearly $100 a tonne more than the price reported in January 2018. However, these prices pale in comparison to the $750 a tonne price peak experienced in the spring of 2014.
In any market, it’s difficult to predict the price bottom and the price top, but in most years fertilizer follows a more predictable pattern than grain. The peak is in the spring, prices drop to a greater or lesser extent after seeding and then start increasing again as the next seeding season approaches.
This is why on-farm fertilizer storage steadily increases. The price swings can pay for storage in short order.
While buying well in advance of spring is usually a money-making plan, the strategy could be more closely refined if retail prices were accurately tracked in geographic zones across the Prairies on a weekly or even bi-weekly basis. Alberta Ag tracks urea, anhydrous (82-0-0) and phosphate (11-51-0). It would be logical to add sulfur and potash to the mix.
Fertilizer is the largest input cost for many crops. Unfortunately, fertilizer suppliers aren’t anxious to publicize their prices. Perhaps they worry about ratcheting up price competition. Producers can, of course, get a price quote if they call and ask, but you don’t typically see prices posted on websites or on billboards.
Farm groups and/or governments should consider investing resources to bring more transparency to retail fertilizer prices.