INSIGHT: Spring in US heralds large sowings and significant fertilizer consumption
Author: Mark Milam
2021/03/19
HOUSTON (ICIS)--Amid winter’s slow retreat, US farmers are ramping up for another round of large acreage plantings, while the fertilizer market has seen values climb and supplies tightening – all of which are setting the stage for a very engaging spring season.
As planters start their trek over millions of acres in the coming weeks, it raises expectations that growers will thereby consume significant amounts of nitrogen, phosphates and potash.
This effort to maximise yields comes as crop prices are favourable, even as fertilizer prices have recently had steep increases.
Values for crop nutrients have climbed as supply is limited because of reduced import availability, logistical challenges and recent production outages due to extreme winter weather.
The price hike has also been supported further by improved farm economics and expectations demand could outstrip supply at some point.
Having received government assistance, and with prices for their corn or soybeans at a higher point than in 2020, farmers are encouraged to get the season underway.
As a market source said “fertilizer should be very strong in response to strong grain prices. Nitrogen and phosphate have already run hard but think they remain firm through the spring season and we finish up the spring season with minimal inventories.”
“Potash is a bit murkier and it has not been able to achieve the price momentum of the other fertilizers.”
The US Department of Agriculture (USDA) also is calculating more corn and soybean sowings.
Corn plantings are forecasted at 92m acres, up from 90.8m acres planted last year, while soybeans are expected to reach 90m acres, a rise of 6.9m acres year-on-year.
The USDA said the gain in soybeans is encouraged by "new-crop soybean futures prices relative to corn, supported by strong Chinese demand and the tightest stocks-to-use ratio since 2013-14."
In comparison, the fertilizer industry on average expects the sowings to slant a bit more in the favour of corn with market participants project plantings between 91-94m acres.
For soybeans the market is close to the USDA’s notion with sowings between 89-91m acres.
“The record for combined corn and soy acres was set back in 2018 at 180.4m acres so I am expecting that to be broken. Corn would likely be higher, but the US is walking a delicate line where it could run completely out of soybeans by late summer,” said a trader.
“Therefore, the prices will likely rally for soy to ration demand and buy acres. Corn will not be left too far behind so upward price momentum is likely there as well.”