By DOUG SCHMITZ
Iowa Correspondent

HARLAN, Iowa — For Clarke McGrath, how long this fall’s projected fertilizer prices would remain “is anyone’s guess,” depending on the usual economic factors of world supply and demand, and the input expenditures of petroleum and shipping costs.

“Late summer-fall would appear to (have been) the time to get fertilizer supplies and prices locked in, as they are lower – some a lot lower – than last fall and spring,” said McGrath, field manager for Iowa State University’s Corn and Soybean Initiative.

But in an attempt to defray costs, most of the farmers McGrath talked to who decided to bypass applying phosphorous and potash (P&K) in their fields are still hoping to apply ammonia (NH3) and dry fertilizer this fall to catch up with those missed applications from last season.

“It would seem that more guys are jumping to get prices locked in as compared to last year, when many did not lock in, hoping prices would fall,” he said. “Then when they did not, many guys skipped P and K applications.”

Over the last two years, U.S. farmers have watched fertilizer prices drastically skyrocket and then remain somewhat buoyant as of late fall 2008. Some experts are forecasting prices for such staples as NH3, mono-ammonium phosphate (MAP) and K to remain lower for 2009 – while others say costs would continue to vacillate.

“Prices were a big topic this past winter,” said Jim Fawcett, ISU field agronomist based in Iowa City. “Hopefully, we’ll never see the volatility in prices that we saw last year again, but with today’s global economy, we probably won’t have as stable of prices as what we have been used to.

“Some farmers are now locking in prices for fall applied ammonia. I’ve been hearing around $400 a ton for fall ammonia, $400 for MAP and $700 for potash.”

But like most other commodities, wholesale fertilizer prices will likely decline, starting in the middle of September, according to Gary Schnitkey, University of Illinois-Champagne/Urbana ag economist.

“Lower fertilizer prices will increase the profitability of corn relative to soybeans,” he said. “As farmers make planting decisions, up-to-date fertilizer prices should be used in calculating relative profitability.”

McGrath, on the other hand, said current prices could fluctuate by fall. For example, he said P may go lower; NH3 could be around $400, compared to $1,000-$1,200 last season; MAP could remain around $400, compared to over $1,000-$1,200 last fall; and K may stay around $700, compared to over $800-$1,000 last season.
If Iowa farmers still experience difficulty locking in prices, McGrath advised they communicate with their dealers and let the dealers know their needs.

“Then the dealers can explain the various options to them, and together they can better manage supplies and prices,” he added.
In the end, fertilizer will be the single most input with the largest cost increase, Schnitkey said.

“For corn, fertilizer costs in 2009 are projected at $215 per acre, an increase of $97 per acre over the 2008 projected level of $118 per acre,” he said earlier last month. “For soybeans, fertilizer costs in 2009 are projected at $98 per acre, a $53 increase over the 2008 level of $45 per acre.”

But fertilizer costs are based on projected prices of $1,000 per ton for anhydrous ammonia, $1,000 for diammonium phosphate (DAP) and $900 for K, Schnitkey said – prices which he obtained from interviewing fertilizer suppliers.

“Fertilizer prices varied across supply firms,” he said. “Moreover, input prices may change into fall and spring; hence, prices farmers pay will vary. Additionally, fertilizer costs will vary across farms, as timing of fertilizer purchase will impact price.”

While he doesn’t make predictions on future stability in fertilizer prices, John Sawyer, ISU extension soil fertility specialist and professor in agronomy, said based on the recent past, price volatility would probably continue. “Drastic input costs could have serious consequences for crop production,” he said, “depending on the nutrient and soil supply – soil test, for example, with phosphorous – and especially for the long-term.”

But compared to the last two years, McGrath said the 2009 scenario for price volatility seems to paint a better picture.

“Many fertilizer production facilities are being built or planned on being built within the next five years or so,” he said. “Supposedly, these plants will increase production to a point where supply will rise above demand, so prices should stabilize or even drop somewhat.
“I share fertilizer price and market news with our campus staff and field agronomists as I get it, sometimes weekly,” he said. “(The) future is still fuzzy to me, and most other agronomists and retail managers.”