Fertilizer shortage could lead to a spring rush on North American farms

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Nov. 24 (Reuters) – A global nitrogen fertilizer shortage is pushing prices to record highs, prompting North American farmers to delay purchases and increasing the risk of a spring rush to apply crop nutrients before the season seedlings.

Farmers are applying nitrogen to increase corn, canola and wheat yields, and higher fertilizer costs could translate into higher prices for meat and bread. Read more

According to the United Nations food agency, world food prices peaked in 10 years in October, due to the increase in cereal crops such as wheat and vegetable oils. Read more

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The Arctic explosion in Texas in February and Hurricane Ida in August disrupted fertilizer production in the United States. Next, prices for natural gas, a key input in nitrogen production, soared in Europe due to high demand and low supply. Global urea prices this month topped $ 1,000 per tonne for the first time, according to BMO Capital Markets. Russia and China have held back exports.

In the United States, nitrogen fertilizer supplies are sufficient for pre-winter applications, said Daren Coppock, CEO of the U.S.-based Agricultural Retailers Association. Applying fertilizer before winter reduces the spring workload on farmers.

But with prices so high, some farmers are delaying their purchases, risking a supply race during their busiest time of year, Coppock said.

Global nitrogen fertilizer sales were $ 53 billion in 2020, and prices are at least 80% higher so far this year, according to Argus Media.

Normally, MKC, a Kansas agricultural cooperative, sells fertilizer to farmers for upfront payment with months of delivery on the road, giving growers the certainty of a key expense.

With soaring prices, MKC reduced its prepaid sales out of prudence.

“You just don’t know what the price will be. It has put a lot of retailers in a tough spot,” said Troy Walker, retail fertilizer manager at MKC.

Delaying fertilizer purchases until spring risks further supply chain congestion as farmers rush to apply fertilizer and plant seeds during a tight window.

“There will be a lot of people who will wait and see,” Coppock said. “(But) if everyone scrambles in the spring to get enough, someone’s corn won’t be covered.”

Wisconsin farmer Jim Zimmerman has decided to get the most out of it and secure all of his fertilizer for spring this year.

“I’m worried about next year’s awards,” Zimmerman said. “It could get worse.”

Nutrien Ltd (NTR.TO), America’s largest agricultural supplier, has secured less nitrogen fertilizer than usual for spring delivery as manufacturers make less available, said Jeff Tarsi, senior vice president of the company’s retail. Sales to farmers are expected to occur closer to spring than usual, he said.

The only nitrogen product that is lacking in North America is ammonium urea nitrate (UAN), said Kreg Ruhl, crop nutrient manager at the Illinois-based Growmark agricultural cooperative. UAN is a liquid form which is convenient for farmers to apply.

The US International Trade Commission is conducting an anti-dumping investigation into UANs from Russia and Trinidad and Tobago, at the request of US producer CF Industries (CF.N).

Importers are reluctant to book shipments until 2022 because they could have to pay retroactive duties if CF wins its case, Ruhl said.

Farmers could reduce their fertilizer requirements by planting more soybeans and less corn, but there is little evidence that many are considering doing so.

The US Department of Agriculture predicted that corn plantations in the United States would drop to 92 million acres in 2022, from 93.3 million in 2021.

Waiting until spring to buy fertilizer might disappoint some farmers, said Matt Conacher, senior fertilizer manager at Federated Cooperatives Limited, a Canadian wholesaler.

“My advice is, if you can get your fertilizer right now, do it.”

(This story has been passed on to add the word “nitrogen” deleted in paragraph 7)

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Reporting by Rod Nickel in Winnipeg; Additional reporting by Julie Ingwersen in Chicago; Editing by Caroline Stauffer and Lisa Shumaker

Our standards: Thomson Reuters Trust Principles.

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