A peak in fertilizer prices last year forced many to pay significantly more for their 2023 inputs. As plans for 2024 are well underway, prices figure to be lower, but still above normal.
As of the week ending July 21, urea prices dipped below $600 per ton for the second time this year and only the second time since April 2021, according to DTN. That is more than $200 per ton lower than this time last year. According to the Illinois Production Cost report on July 27, potash was $557.70 on average while liquid nitrogen was $536.25. Anhydrous ammonia also averaged $870.50 per ton.
While these declines are good to see for farmers, University of Illinois agricultural economist Nick Paulson said prices need to be kept in perspective.
“Except for 2022 and 2023, anhydrous ammonia prices have rarely been above $1,000 per ton,” Paulson wrote in an article with the University of Illinois farmdoc website. “Before 2021, the last time anhydrous ammonia was above $1,000 was in 2008, during the aftermath of the 2008 financial crisis. From 2009 to 2020, anhydrous ammonia prices averaged $637 per ton.”
Paulson said that with 2023 growing season fertilizer applications behind many farmers and markets turning toward post-harvest applications or spring 2024 applications, there may be some good opportunities for farmers to make their orders.
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“There should be an easing of nitrogen prices,” he said. “They are highly correlated with corn prices and natural gas prices, and current fall bids suggest a decline in those prices. Natural gas has also declined from above-average levels to below-average levels.”
Travis Williams, associate manager of product for GROWMARK, wrote in an article for FarmWeek Now that the continued decrease in natural gas has given him more optimism for farmers making purchases ahead of the 2024 growing season.
“If fertilizer values remain lower than previous years and grain prices stay strong, growers are in position for a favorable fall season to apply fertilizers,” he said.
The dry weather seen throughout the Corn Belt may also provide a boost to those looking to make their applications in the fall, but one drawback may be from lower river levels.
“The continued dry weather has created some concern of drought and potential low water levels on the rivers that could affect prompt resupply for terminals supplied via barges,” Williams said.
Paulson said the dip in prices compared to late 2021 and most of 2022 will be welcome for many farmers.
“Nitrogen fertilizer costs per acre will be near record levels for 2023 on many farms,” Paulson said. “Fundamental factors suggest nitrogen fertilizer prices will decline into fall 2023. Time will tell if, in fact, these declines happen.”
