Seem familiar? Corn + Supply + Demand = High Urea Prices
Key take away: Sell part of 2013 crops and buy 2013 fertilizer/fuel to lock in likely the largest farm margins in history.
The fertilizer market is being driven by extremely high crop commodity prices for corn, soybeans, canola, and wheat. The main driver for Urea is corn due to the drought in the US Corn Belt resulting in the price being around $8/bu. The expectation from the reduced US corn crop and high price is that the 2013 corn crop will be the largest planted ever; therefore needing a huge amount of nitrogen to grow it. The US distribution system was relatively empty going into summer and the volume of imports is not looking excessive versus the demand in the market. The Urea market in the US gulf bottomed out this summer at $400 US/ST back in June resulting in some Western Canadian summer fill opportunities for growers around $600Cdn/Mt Del. Western Canadian Urea prices have now moved higher to reflect the price increase in the Gulf. We have started to see Gulf Urea prices move past $450US/ST and head towards $500US/ST in the near term.
The market has a similar feeling to 2008 when we saw crop prices increase rapidly and fertilizer quickly follow. As everyone, I am sure can recall the ending in 2008 was not very pretty when the world macro economics collapsed and took crop prices down. I hope we don’t have the same ending this time around but with the situation in the USA and Europe it wouldn’t take much to have the same end result. The markets are volatile and uncertain, don’t let greed and fear cloud your judgement. These are unbelievable times to be farming and you need to take advantage of them.
Canola, Wheat and Barley are in the 95% decile of the market; meaning the market has spent 95% of the time in the last four years priced below the current prices of today. (Source: Know-Risk Farm Management).
Remi Schmaltz is the General Manager at Decisive Farming, where is the key driver behind new web technologies and the sales growth of Optimize Rx and Know-Risk Farm Management. Previously, Remi Work at DynAgra and was responsible for procurement of all crop inputs, logistics and strategic business expansion. firstname.lastname@example.org
Decisive Farming is dedicated to providing growers in Western Canada with the tools and knowledge required to increase the profitability of their farm business. Using a combination of industry expertise and cutting-edge technologies, we’re helping our clients make better decisions by utilizing precision agronomics, variable rate technology, soil fertility, crop marketing, risk management, data management and carbon credits.