URBANA, Ill. — With fertilizer values easing by as much as 60 percent over the past year in the Midwest, farmers are booking their fall fertilizers to take advantage of the price decreases, most notably for anhydrous ammonia. In Illinois, the average rate for potash fell to $870 per ton during July, according to the August USDA Illinois Production Cost report. 

But for how long will lower — albeit still historically high — fertilizer values remain sustainable?

International news agency Reuters reported on Aug. 3 that “Nutrien on Wednesday decided to indefinitely pause its ramp-up plans for potash production and halt work on its clean ammonia project at Geismar, Louisiana, as the world’s biggest fertilizer producer grapples with falling prices.”

According to Reuters, “U.S.-listed shares of Nutrien stock fell 2.6 percent in extended trading as the company cited market conditions for stopping efforts to bolster potash output to 18 million tonnes.”

The article credits the easing of potash prices to the resumption of shipments from major supplier Belarus, whose exports were largely frozen in 2022 due to western sanctions after Russia’s invasion of Ukraine. However, “black swan” events such as the recent Russian bombardment of Ukrainian agricultural shipping ports could continue to affect the international fertilizers market by again pushing prices higher.  

In addition, DTN reported in its July Fertilizer Outlook: “In the short term, we expect U.S. ammonia prices to reset higher following summer fill and (be) bullish going forward given tighter ammonia markets and higher natural gas prices outside the country as likely to support higher prices.” According to DTN, “fundamentals are looking stronger for all nitrogen products” later this year, based on reports from contributing partners Fertecon, Agribusiness Intelligence and IHS Markit. 

All of this points to farmers considering the pricing of at least a portion of their fertilizer needs for the upcoming year as soon as possible, noted the University of Illinois farmdoc team in an August 1 report,  “Fertilizer Prices Continue Year-Long Decline from 2022 Peak” (Paulson, N., C. Zulauf, G. Schnitkey and J. Baltz).

“The extended downward trend in prices might arguably suggest a wait-and-see approach to pricing 2024 fertilizer needs. However, current futures bids for the 2024 corn crop and natural gas suggest markets may be headed back to conditions last experienced in mid- to late-2021. Fertilizer prices are also approaching levels experienced in 2021. Therefore, market expectations and ongoing risks suggest considering the pricing of at least a portion of fertilizer needs for the upcoming year,” the article stated, in part. 

After reaching peak prices in the summer of 2022, supply and demand fundamentals were contributing factors to the easing of prices, the article notes. 

Comparing types of fertilizers, anhydrous ammonia reached $1,635 per ton in June 2022 but declined by almost 47 percent to $870 per ton by July 27, 2023. Urea and liquid nitrogen, at $497 per ton and $536 per ton on July 27, have dropped over 50 percent and almost 22 percent, respectively, from 2022 peak prices. 

In addition, DAP prices have fallen by 20 percent from more than $1,000 per ton in June 2022 to $822 per ton on July 27, and potash prices have fallen over 35 percent to $558 a ton from a peak of $865 in April 2022. 

How long these prices will last is anyone’s guess, but market analysts seem to agree that farmers should consider booking at least a portion of their next fertilizer purchases now. “Sell some grain against it with some of the ratios we’re currently seeing (between crop and fertilizer prices),” Josh Linville, vice president for fertilizer for StoneX, told the Illinois Farm Bureau’s Farmweek in an August 3rd interview.