While fertilizer prices are likely still higher than farmers prefer, the good news is prices are beginning to move lower. Jason Troendle, an economist with the Fertilizer Institute, says they are seeing a lower trend.
“We are seeing that kind of start to come down. I mean since, I think, last September or October, both P and K prices have been trending down, and then, I think, since a little before the end of the year, nitrogen prices have come down, and they continue to come down a little bit now. So overall, I think we’re just experiencing some general softness in demand and, fingers crossed, things have maybe stabilized a little bit on the supply side, which is all helpful in and of itself.”
An improvement on the supply side is a good thing because farmers haven’t had a lot of stability there for a couple of years.
“No, we definitely have not, and so, it seems like there’s kind of one thing after the other. So, there’s still different things that are weighing on the market currently, particularly, for example, on the nitrogen side. We’ve seen natural gas prices globally, especially in Europe, come back down into a little bit more of a normal range on the mild winter and the reduction in demand that was needed for heating and such like that. So, I think all of that has, for the most part, kind of helped.”
Commodity prices are still helping farmers acquire the inputs they need for this spring.
“We still see fairly robust and fairly strong output prices, and so, when you look at kind of the ratio of output prices relative to fertilizer, specifically as an input, I think that’s still in a manageable range, and so, I think there would be a floor. I say all that just to say that, despite maybe softening a little bit in demand, we would expect that a lot of that product would still get put out based on the strong commodity markets that we’re seeing.”
He says it’s hard to know for sure if prices will continue lower.
“I think it’s really difficult to make that prediction of exactly where it’s going to go. Everybody wants to time it at the bottom of the trough, which is very difficult often to do, and I think the things that we’re continuing to watch that would indicate where it goes are those raw input costs. And so, where does sulfur on the phosphate side, phosphate rock on the phosphate side, as well as, of course, natural gas on the ammonia side? If the pressure keeps coming off those, I think that will help it takes a little while for that to translate all the way through the market, of course. And then, you know, are there going to be any other significant geopolitical or trade disruptions?”