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The 2014 Buyer’s Forecast from Farm Industry News offers insight into the projected prices for seed, crop protection, machinery, fertilizer, land and financing this week. Here we look at fertilizer prices for 2014.
Postharvest price hike
Van Trump says he doesn’t want to see farmers lose out on low prices while they are still available. “We’re advising clients to lock in fertilizer prices now, just in case there’s a rebound in demand,” he says. “If there’s still a chance to lock in some $5 corn, then that would help shore up some downside risk. Once the fertilizer price is locked in, that will help put a floor in place for grain prices.”
This year, some farmers may encounter an insurance guarantee that is below their price of production, adds Van Trump. “There’s a good possibility we’ll see a sub-$4.50 corn price range in 2014, along with fertilizer prices that bounce back to the higher side,” he says. “So, the risk is on the upside right now — the downside potential for fertilizer prices is somewhat limited.”
A seasonal low for fertilizer prices typically occurs just prior to harvest, says Reincke. “The best time to buy is generally a little before the fall spreading season begins,” he says. “However, farmers also need to be conscious of offsetting any risk by selling some commodities near the time of purchase to cover their purchase cost.”
Fertilizer prices might come down a little bit more, but not much more than they are now, predicts Hart. “The tendency is that when prices get really low, China and others will move in and make a large purchase, which increases prices somewhat afterward,” he says. “Another possible big threat to higher prices would be any more escalation of tensions in the Middle East.”
If Middle East violence breaks out again, it would likely “restrict some supplies and make markets tighter and prices higher,” says Hart. “It would have the biggest impact on potash, but it could negatively impact N supplies as well, particularly if shipping lanes in the region get backed up.”
However, for now, “there’s plenty of fertilizer available,” Hart adds.