Several different factors are impacting the prices and demand for nitrogen fertilizers this spring.
“We’ve gone through a relatively tough March and a lot of the Midwest has really struggled to get anything done,” says Josh Linville, Vice President and Wholesale Fertilizer Expert at StoneX, referring to fertilizer applications that are typically made ahead of spring planting.
“The reason that’s important on the nitrogen sector is due to the fact that that’s when you put on a lot of your anhydrous for the spring,” says Linville. “Every indication we have now is—it’s too early to call this and say it’s definitively done—but as of right now, it looks like there’s going to be a short fall on anhydrous demand.”
He says many farmers are opting this spring for other nitrogen options—either urea or UAN (urea-ammonium nitrate).
“We’re not yet moving our corn acres down. We still think the corn acres are going to be planted. We’re planning on 92 million acres across the U.S., so if we have a poor anhydrous run and we keep our corn acres where they’re at or even move them up slightly—that means that nitrogen demand is still there. That’s why producers are having to decide whether to go to urea or UAN.”
Linville says urea has become a less expensive option over UAN.
“Every time I gave a presentation and spoke to farmers, I would sit there and I’d show the price differential between urea and UAN,” says Linville. “Without fail, I would have one or two farmers come up and say, ‘It’s interesting you put that up. I’m normally a UAN person, but this year I’m making a change. If I can save significant money, I’m going to go ahead and take advantage of that.’”
“This has been almost half-a-year of farmers coming in and saying, ‘We’re making the switch to urea’—but I don’t think a lot of people in the marketplace really took that seriously,” according to Linville.
He adds that higher demand for urea could drive prices higher.
“We’re in that part of the calendar where it’s really getting too late to call on new tons,” says Linville. “If we do see this surge of demand for urea really start to happen and we start moving up our import needs, that’s where prices start to really rally even further from where we’re at because we don’t have enough in place to meet the demand at that price level.”
“I’m not going to sit here and say there’s going to be shortages of urea. At a certain price you’ll find what you want. You just may not like that price,” says Linville.
Click BELOW to hear C.J. Miller’s news report and interview with Josh Linville, Vice President and Wholesale Fertilizer Expert at StoneX, discussing the different factors impacting nitrogen prices and demand this spring.