During the last week of May, the same chilly weather that made emerged corn look yellower than growers liked also made autumn-planted winter forages (triticale, rye, wheat, barley and some speltz) look pretty good. That was particularly the case if these small grains got a dose of nitrogen (N) as soon as the snow totally vanished (in March at most Northeast locations).
It was wise to limit rye’s N dose to 50 lbs./acre, since this crop’s gangly nature makes it more prone to lodging. The last couple days in May, our home’s thermometer in downtown Hartwick logged readings in the upper 30s. If plants have feelings, I’m sure our well-started peppers and tomatoes were happy to still be in our enclosed porch rather than the raised beds in the front yard. Nitrogen not used by the winter forages will be scarfed up by the next crop in the rotation (usually corn).
Speaking of N, let’s examine current soil nutrient commodity prices. These come from research forwarded to me by Jeff Cassim, general manager of Liquid Products in Seneca Falls. Cassim extracts his data from fertilizer industry periodicals – not just commodity prices, but geopolitical facts impacting energy commodities as well as plant food raw materials. These are average values calculated from a range of dollar prices per short ton for the day of quote. The location of the quote is the freight point-of-origin nearest the Northeast, and the date of the quote is May 23, 2024. In parentheses is that commodity’s price (year earlier) on May 23, 2023:
Urea (Cincinnati) $372.50 ($482.50); ammonium nitrate (Mid-South) $375 ($395); ammonium sulfate (Minneapolis) $437.50 ($398); urea/ammonium nitrate (Cincinnati) $267.50 ($272.50); ammonia (Eastern Corn Belt) $587.50 ($455); diammonium phosphate (Cincinnati) $597.50 ($685); mono-ammonium phosphate (Cincinnati) $640 ($690); muriate of potash (Vancouver, Canada) $229 ($339); sulfate of potash (West Coast) $685 ($745); and sulfur (Gulf Coast) $84.50 ($79).
The dynamics of fertilizer ingredient economics is presently almost boring compared to two years ago. Back then, it seemed as though the Ukraine-based headlines manipulated the natural gas playing field globally. Russia controls a big share of Europe’s natural gas. This fact they put to good use, as they basically tried to freeze out their military opponents. That natural gas crisis spread from Ukraine’s home heating chaos to the economics of fertilizer manufacturing worldwide. Reviewing the relationship between natural gas and commercial fertilizer is ink well-spent.
Let’s start with natural gas (methane – chemically, CH4). Methane and water are combined, subjected to high temperature and extreme pressure. The resulting chemical reaction yields carbon dioxide (CO2) and hydrogen (H) gas. Earth’s atmosphere is 78% N, which is removed from the air by fractional distillation. This N is blended with the isolated H, also under very high pressure and temperature conditions. Thus blended, one N and three Hs react to become an anhydrous ammonia (NH3) molecule. Add the right amount of CO2 to the NH3 molecule – along with high temperature and pressure – and the result is urea.
Additional chemical reactions produce three other main ingredients: urea/ammonium nitrate (UAN), mono-ammonium phosphate (MAP) and diammonium phosphate (DAP). Making things even more interesting, a fairly strong relationship exists, in terms of supply/demand, between natural gas, drilled petroleum and corn-derived alcohol.
Conventional phosphate fertilizer production starts with mined rock phosphate ore being chemically treated with sulfuric acid, a reaction yielding phosphoric acid and waste slag. The phosphoric acid is treated with ammonia, a reaction which yields MAP. Treat MAP with more ammonia and the result is DAP. The fertilizer analysis of MAP is 11-52-0 (N-P-K) and DAP is 18-46-0. Since ammonia is made from natural gas – along with CO2, atmospheric N and water – CH4 costs greatly influence costs of all commercial N fertilizer as well as P fertilizers. With chemical fertilizers, there is basically no phosphate manufacturing independent of natural gas.
What I find interesting is that the world economic portfolio seems to have gotten used to localized military conflicts and natural disasters. Some call it the new norm. Be that as it may, here are some thoughts generated by Cassim and some of his industry cohorts:
On the urea scene, an extended application season caused by extensive rain across the Corn Belt during late April and early May allowed distributors to build up previously low inventories going into spring. This prevented any major supply shortages upstream in the Mississippi Basin. Healthier inventories have kept a lid on prices for readily available urea at the Port of New Orleans (NOLA). Adequate urea supplies upriver were reflected by terminal prices at the end of May. Terminal prices upriver from NOLA continued to slide despite a strong push by farmers to plant corn.
With respect to urea/ammonium nitrate (UAN), those prices upriver declined further at May’s end, as distributors – challenged by delayed planting season demand – focused on selling more volume. UAN terminal prices fell by about $7.50/short ton throughout the Midwest. Distributors lowered prices to sell more volume, even though sidedress demand had been lowered by extensive rains across the Central U.S.
In the phosphorus arena, demand at May’s end homed in on MAP volumes impacted by limited supply availability throughout the domestic supply chain. This was due primarily to reduced offshore availability of this fertilizer ingredient. Fiscal year-to-date (July – March) MAP imports reached nearly 863,000 short tons, which marked a 12% increase compared to the same period last season. But according to U.S. Census Bureau, these numbers were actually 16% lower than the previous five-year average.
Also as of May’s end, strike action by the Teamsters Rail Conference Canada was unlikely for another two months, according to rail operator Canadian Pacific-Kansas City. A work stoppage that could have begun as early as May 20 has been delayed because Canada’s mediators successfully enabled the union and rail operator representatives to continue negotiations. Delaying any rail strike past the peak demand for spring plant food movement helped lessen a potential logistical nightmare.
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