Fertilizer Inflation Likely to Persist into Spring Planting

Dec 02, 2021

A dramatic rise in fertilizer prices is weighing heavily on U.S. crop farmers and input suppliers as they prepare for the 2022 planting season. Prices for nitrogen-based fertilizers commonly used for corn production have skyrocketed to all-time highs in recent months. Fertilizer price increases are being driven by nitrogen production challenges, tight global supplies, rising natural gas costs and steady demand.

According to a new report from CoBank’s Knowledge Exchange, fertilizer prices are expected to remain elevated for at least the next six months and throughout the 2022 spring agronomy season. The report also suggests that while U.S. soybean acres will rise nominally compared to 2021 as a result of higher fertilizer prices, the total volume of soybean acres will not exceed corn acres in 2022.

“The sharp rise in fertilizer prices has fueled speculation about a major acreage shift away from corn,” Kenneth Scott Zuckerberg, lead grain and farm supply economist with CoBank, said. “We don’t see that happening in 2022. The current price ratio of soybeans to corn shows that soybean prices remain weak compared to corn. And demand for corn among U.S. ethanol producers is expected to remain strong given the current high fuel prices and record blending margins.”

Larger acreage shifts from corn to soybeans are likely in the longer term, however, as production of biofuels such as renewable diesel lean more towards soybeans versus corn, Zuckerberg added.
U.S. crop farmers and farm supply cooperatives are facing operational anxiety heading into 2022, driven by high fuel prices, shortages of agrochemicals due to COVID-related disruptions and, most importantly, the parabolic rise in fertilizer prices.

To put the rise in fertilizer prices into perspective, the benchmark Green Markets North American Fertilizer Index has risen by 265% since May 2020 and there is little reason to expect it to reverse any time soon.

Several factors have played a role in exacerbating the supply-demand imbalance for fertilizers. Higher natural gas prices due to production shocks in China and England have been a major factor. A temporary shutdown of CF Industries’ Donaldson fertilizer facility in Louisiana-the world’s largest nitrogen operation-contributed to supply challenges, as did fertilizer export restrictions by China and Russia.

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Video: Dicamba Returns for Georgia Farmers: What the New EPA Ruling Means for Cotton Growers

After being unavailable in 2024 due to registration issues, dicamba products are returning for Georgia farmers this growing season — but under strict new conditions.

In this report from Tifton, Extension Weed Specialist Stanley Culpepper explains the updated EPA ruling, including new application limits, mandatory training requirements, and the need for a restricted use pesticide license. Among the key changes: a cap of two ½-pound applications per year and the required use of an approved volatility reduction agent with every application.

For Georgia cotton producers, the ruling is significant. According to Taylor Sills with the Georgia Cotton Commission, the vast majority of cotton planted in the state carries the dicamba-tolerant trait — meaning farmers had been paying for technology they couldn’t use.

While environmental groups have expressed concerns over spray drift, Georgia growers have reduced off-target pesticide movement by more than 91% over the past decade. Still, this two-year registration period will come with increased scrutiny, making stewardship and compliance more important than ever.