For several years now, I have subscribed to the online Argus North American Fertilizer (ANAF) newsletter. It’s a semi-monthly publication, the most recent one being Sept. 29. ANAF writers stated that U.S. negotiators have convinced railroad brass and union leaders to agree, tentatively, on a new labor contract, hopefully avoiding a nationwide strike, threatening domestic fertilizer production and subsequent grain production. The tentative agreement came after railroads halted hazardous material shipments on Sept. 12, including fertilizers. Fertilizer industry chief executive Corey Rosenbusch, on Sept. 28, said a nationwide strike would have “quickly impacted supplies for fall application and led to a reduction in U.S. production at a time when 70% of European production has been curtailed or ceased due to Russia’s shutoff of natural gas supplies.”
Writers stated that overall market demand “continues to weaken amid an influx of Russian shipments and rising domestic production, which have together far outpaced nearby (domestic) demand as elevated carryover inventories from the spring continue to limit buyer interest. An uptick in demand is unlikely prior to clarity on farm-level demand, expected to follow the bulk of corn and soybean harvesting.” Russian President Vladimir Putin said that his country is ready to move Russian fertilizers that have accumulated at European ports to developing countries for free, a move that could apply downward price pressure. (Note: “free” applies to shipping, not product cost.)
From the ANAF newsletter, I extracted some average fertilizer commodity prices per short ton, posted on Sept. 29. They’re compared to year earlier (YE). The first four commodity prices are FOB Cincinnati; the last item, muriate of potash (MOP), is FOB Corn Belt. Urea averaged $673, up $111 from YE; urea/ammonium nitrate (UAN) averaged $590, up $180 from YE; diammonium phosphate averaged $792, up $82 from YE; and mono-ammonium phosphate averaged $820, up $35 from YE. MOP averaged $715, up $40 from YE. The big jump in UAN is because production costs of this commodity in Europe are so high because Putin shut down Russian natural gas shipments to the EU; UAN manufacture requires a lot of natural gas, which is a lot cheaper in the U.S. So the UAN price charged to American farmers has to compete with what the EU is willing to pay, because large quantities of UAN are now being shipped to Europe from the U.S.
The ANAF newsletter summarizes ag-oriented weather too. Unseasonably dry and warm conditions prevailed across most key agricultural regions in late September. Below-normal precipitation was forecast across most of the eastern U.S. into early October, enveloping nearly every key growing region except for the Northern Plains, according to the National Weather Service (NWS). Drier conditions are expected to concentrate over Texas and the Mississippi Delta. Above-normal temperatures are forecast from New Mexico to the East Coast, spanning as far north as the Great Lakes. The probability of unseasonably high temperatures remains the highest along the U.S. Gulf Coast.
Temperatures should remain above average across the western U.S., with significantly higher temperatures in the Pacific Northwest in the upcoming week. Conditions the first whole week of October were expected to be slightly cooler than average along the East Coast, according to the NWS. Temperatures in later October are forecast higher than average across the U.S. Higher temperatures in California enabled an early-season rice harvest and winter wheat planting there, according to USDA. Most parts of the country should expect normal to slightly below-average precipitation in the coming weeks.
Most of the West Coast and the Rockies continue experiencing severe drought conditions, according to the National Oceanic and Atmospheric Administration (NOAA). Exceptional drought conditions are persistent in several areas of the western U.S., most notably the San Joaquin Valley and southern Kansas, stretching into Oklahoma and central Texas. Record-breaking temperatures and drought conditions across the High Plains have deteriorated field conditions there.
Dry weather helped planting efforts on the Great Plains, according to USDA, but ongoing drought conditions and high temperatures mean the region will continue suffering drought stress. Unharvested crops in the South could be harmed by the heavy rains and winds that followed Ian.
U.S. corn and soybean conditions stabilized in the week ended Sept. 25, but overall crop ratings and harvesting trended behind YE. About 52% of corn acreage and 55% of soybean acreage was rated in good to excellent condition by that date, unchanged from week before, but lagged ratings from the same time YE. Corn ratings the last week of September marked a 7% decline from YE, while soybean conditions dipped by 3% compared to YE.
Crop development and harvest pace lagged compared to historical trend. Corn denting increased by 5% on the week to 92%, still down 2% from the five-year average and 4% behind YE. About 58% of corn has reached maturity after an 18% leap, compared to the previous week; this gain narrowed the gap to the five-year average to 3%. U.S. farmers had harvested about 12% of corn by the ANAF newsletter publication date, compared with 17% by this time YE and a five-year average of 14%. Soybeans dropping leaves trailed the five-year average by 2% at 63% complete, a 10% lag year over year.
There are two reasons why discussing the nitty-gritty of the growing season is relevant this late in autumn: first, more and more growers are seriously embracing the culture of winter grains and winter forages and thus benefit from having a “handle” on the costs of these crop inputs. Secondly, fertilizer production is, more and more, a year-round (as well as a worldwide) proposition. At any time, someone somewhere is planting something. This whole concept is increasingly universal. In 1960, U.S. farmers used 25% of the planet’s fertilizer; in 2020, that figure was down to 10%! We’re not using less – other countries use more.