Proper Fertilizer Application Important with Supplies Tight, Prices High

Proper Fertilizer Application Important with Supplies Tight, Prices High

February 2008

Several Factors Affecting Supply, Price

Nitrogen and phosphorus fertilizer prices increased dramatically in the last year and are expected to keep climbing in 2008. Several factors are contributing to this change, a University of Nebraska-Lincoln soils specialist says.

Increases in fertilizer prices often are blamed on natural gas prices because natural gas accounts for 80-90% of the cost of producing anhydrous ammonia, the base material for producing all other nitrogen fertilizers, said Gary Hergert, soils specialist at UNL's Panhandle Research and Extension Center at Scottsbluff.

"However, that doesn't represent the whole story," he said.

Natural gas prices in the U.S. averaged about $7 per million British thermal units during 2007. World prices for natural gas are much lower and range from less than $1 MMBTU in parts of the Middle East to only $2 to $3 in Russia.vWorld demand and ethanol production are among several other factors contributing to the increasing fertilizer prices, according to The Fertilizer Institute.

Demand, especially in South America, China and India, has risen 14% in the past few years, Hergert said.

"With fertilizer being a worldwide commodity, the U.S. must compete with other buyers," he said. "The weak U.S. dollar makes fertilizer more expensive for U.S. producers." The U.S. imports 75% of its urea nitrogen fertilizer.

Regionally and locally, increased production of corn to meet biofuel demand has increased fertilizer demand. Transportation costs (barge, trucking, rail) also are higher and are considerable for people in areas far from major distribution centers.

In addition, because of tight cost margins and environmental regulations, 25 U.S. ammonia production facilities have closed permanently since 1999. New production facilities are being built in China, the Middle East and the Caribbean.

One of the major production ports for shipping urea and ammonia is Yuzhnyy in the Ukraine on the Black Sea, he said.

Hergert said an excellent source for fertilizer information is available at http://fertilizerworks.com/ and by clicking on The Market in the left column. Remember, these prices are set by world manufacturers and do not reflect transportation, marketing and dealer costs.

All indicators point to increasing fertilizer costs and tight supplies, so management that maximizes fertilizer use efficiency is essential, he said.

Sandi Alswager Karstens
IANR News

Farmers who haven't lined up this spring's fertilizer supply may have a hard time doing so between now and planting time, University of Nebraska-Lincoln soils specialists say.

Fertilizer supplies are tight, and nitrogen and phosphorus prices have increased dramatically in the last year, said Gary Hergert, soils specialist at UNL's Panhandle Research and Extension Center at Scottsbluff.With supplies tight and prices high, proper nitrogen fertilizer application at UNL recommended rates is even more important, said Charles Shapiro, UNL soils specialist at the Haskell Agricultural Laboratory at Concord.

Nitrogen and corn prices have typically been in the 8-to-1 to 10-to-1 corn-to-nitrogen ratio. UNL nitrogen recommendations were designed to be most economical in that range. Adjustments are needed when the ratio is either higher or lower, Shapiro said. Recently, UNL introduced an adjustment to take into account the changing economic conditions.With March corn at $5.07 per bushel and nitrogen prices at about 50 cents per pound, the corn-to-nitrogen price ratio is at the recommended 10-to-1 range. This will not significantly impact UNL nitrogen recommendations for Nebraska's corn growers this year, Shapiro said.

"The cost of under applying nitrogen is always a lot higher than over applying, but our recommendations are profitable. Since fertilizer prices are a lot higher now, it is more important that our recommendations be followed closely," Shapiro said.

The key to maintaining profitability is to know soil test levels and apply fertilizer accordingly, Hergert said.

"Make sure you credit all nitrogen sources for the crop, then do the best job of applying nitrogen on a timely basis to maximize fertilizer recovery," he said.

Growers also can save money by working manure into their fertilizer programs.

"Manure is an excellent nutrient source for nitrogen, phosphorus and micronutrients (zinc and iron)," he said. However, manure also should be tested for nutrient content.

The old ballpark figure of 10 pounds nitrogen and 5 pounds phosphate per ton can be inaccurate for today's manure produced with corn byproducts, Hergert said. Nitrogen availability in manure and composted manure varies because nitrogen must be converted from organic to usable inorganic forms. The crop should be monitored mid-summer to see if additional inorganic nitrogen may be required to reach yield expectations.

Phosphate fertilizer also has almost tripled in price.

"I've been telling producers to follow the management guidelines we've stressed for years. Row application is more efficient than broadcasting, but over time it will not build your soil phosphorus level," Hergert said.

More information about nitrogen and phosphorus rates and costs, including the UNL Corn Nitrogen Recommendation Calculator, is available at UNL's soil fertility Web site at http://soilfertility.unl.edu/.

Sandi Alswager Karstens
IANR News