Farmdoc Search Subscribe About Contact Us friends of farmdoc
Home
Finance
Marketing & Outlook
Management
Law & Taxation
Policy
FASTtools
Crop Insurance
Presentations
Prices & Weather
Web Resources
Visit farmdoc daily

farmdoc Sponsors


farmdoc Sponsors

farmdoc Sponsors


 

podcast (Guide to Podcasting on farmdoc here)

Play Now : MP3 (in page player)

Download :MP3 (right click to 'save as')Subscribe: RSS/iTunes XML

FEFO 10-02
February 4, 2010

FERTILIZER PRICES IN 2008, 2009, AND 2010

Fertilizer costs for corn in 2010 likely will average $100 per acre for corn on high-productivity farmland in Illinois. These costs will be below 2009 costs. These fertilizer costs are based on fertilizer prices reported in a new report listing average fertilizer prices in Illinois.

Illinois Production Cost Report

Last year, the Agricultural Marketing Service an agency of the U.S. Department of Agriculture began releasing a report entitled Illinois Production Cost Report . This report lists average, Illinois prices at distributors for the following crop production inputs: anhydrous ammonia, urea, liquid nitrogen, diammonium phosphate (DAP), potash, lime, and diesel fuel. AMS began publishing the report in September 2008 and the report has been published bi-monthly. The report is available at: http://www.ams.usda.gov/mnreports/gx_gr210.txt .

Fertilizer prices

Based on the January 21, 2010 report, prices for fertilizers are:

  • Anhydrous ammonia $517 per ton,
  • Urea $421 per ton,
  • Liquid Nitrogen (28%) $245 per ton,
  • DAP $447 per ton, and
  • Potash $495 per ton.

figure 1

-Click images to view larger versions-

January 2010 prices are considerably below fall 2008 prices, but anhydrous ammonia and DAP prices have risen from the fall 2009 prices. Anhydrous ammonia high price of $1161 per ton occurred in October 2008 (see Figure 1). From this high, ammonia prices fell to $428 per ton in September 2009. From the $428 per ton low, anhydrous ammonia prices rose to the $519 in January 7, 2010, falling to $517 in January 21 st . DAP highest price of $1,174 occurred in October 2008 and the low of $378 occurred in November 2010. Since November 2010, DAP prices rose to $446 per ton in January 2010. Potash's highest price was $942 in October 2009. Since the October 2009 high, potash prices have generally fallen, reaching their low of $495 per ton in January 2010. (See Appendix Table 1 for anhydrous ammonia, DAP, and potash prices over the entire period)

Variability in Fertilizer Costs

Changes in fertilizer prices from September 2008 through January 2010 have large impacts on fertilizer costs. To illustrate, per acre fertilizer costs were calculated using application rates typical of corn raised on high-productivity farmland in Illinois: 180 pounds of anhydrous ammonia, 170 pounds of DAP, and 85 pounds of potash.

figure 1

-Click images to view larger versions-

Given these application rates, anhydrous ammonia costs per acre were at a high of $104 per acre if ammonia was purchased in the fall of 2008 (see Figure 2). Given March 2008 purchase, ammonia costs were $140 per acre. January 2010 prices result in a $47 per acre anhydrous ammonia costs.

Total fertilizer costs including anhydrous ammonia, DAP, and potash were over $240 per acre given all fertilizers were purchase in fall 2008 (see Figure 2). Pricing during spring 2009 resulted in total fertilizer costs in the $140 per acre range. January 2010 prices result in fertilizer costs around $105 per acre.

Difference in fall 2008 and spring 2009 prices indicate that there will be sizable differences in fertilizer costs across farms, simply depending on the timing of fertilizer prices. Timing differences could make over a $100 difference in fertilizer costs, even given the same application rates over farms.

Spring 2010 Fertilizer Price Outlook

Changes in energy prices, along with futures prices on energy prices, do not point to increasing fertilizer prices during the spring of 2010. However, there are a number of factors that suggest that there are risks of higher spring prices. Due to wet weather, little fertilizer was applied during fall 2009. This could lead to more fertilizer applications in the spring, potentially leading to supply and manufacturing bottlenecks. These bottlenecks then could lead to higher prices so as to ration fertilizer applications. This possibility, along with general energy price uncertainty, leads to the sizable risks of rising fertilizer prices.

Summary

A new report released by AMS reports average fertilizer prices in Illinois, thereby allowing farmers and others to more closely monitor fertilizer in Illinois. Prices suggest that 2010 costs for corn likely will be around $100 per acre, considerably below 2009 costs. Fertilzier costs in 2009 will vary across farms simply due to the timing of fertilizer purchases. Current Prices suggest that 2010 costs for corn likely will be around $100 per acre, considerably below 2009 costs. While below 2009 levels, 2010 costs will be historically high. Between 2000 and 2007, fertilizer costs for corn averaged $68 per acre in central Illinois on high-productivity farmland.

 

Submitted by: Gary Schnitkey, Department of Agricultural and Consumer Economics, University of Illinois

 

figure 1

-Click images to view larger versions-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Department of Agricultural and Consumer Economics    College of Agricultural, Consumer and Environmental Sciences
Home | Finance | Marketing & Outlook | Management | Law & Taxation
Policy | FAST Tools | AgMAS | Crop Insurance | Prices & Weather | Ag Links
Search | Subscribe | About farmdoc | Contact Us | friends of farmdoc
E-mail: farmdoc@illinois.edu
University of Illinois