Rod Nickel

(Reuters) – The global shortage in nitrogen fertilizer has caused prices to reach record highs, causing North American farmers to hold off on purchases. This increases the likelihood of a scramble for the crop nutrient prior to planting season.

To increase the yields of wheat, corn and canola, farmers use nitrogen. Higher fertilizer costs may lead to higher bread and meat prices.

According to the United Nations Food Agency, world food prices reached a 10 year high due to increases in vegetable oils and cereal crops.

U.S. fertilizer production was affected by Hurricane Ida and the Texas Arctic Blast, both in February and August. Because of high demand and limited supplies, European prices for, which is a crucial input to producing nitrogen, rose in Europe. BMO Capital Markets reported that global urea costs reached over $1,000 per ton for the first month. China and Russia have slowed exports.

Daren Coppock (CEO at the U.S.-based Agricultural Retailers Association) stated that there are enough nitrogen fertilizer stocks in America to apply before winter. The spring workload of farmers is reduced by applying fertilizer prior to winter.

Coppock explained that some farmers delay buying due to high commodity prices. They are at greater risk of running out of supplies in their most busy season.

According to Argus Media prices have risen at least 80% this year and global fertilizer sales totaled $53Billion in 2020.

MKC (a Kansas farm cooperative) normally sells fertilizer to growers for payment upfront with delivery several months down the line. This provides certainty regarding a major expense.

MKC is taking precautionary measures due to the rising prices.

You don’t even know the cost of your product. Troy Walker, MKC director of retail fertilizer said that it has placed many retailers in difficult situations.

The risk of supply chain congestion is increased if fertilizer orders are not made in spring. Farmers rush to use fertilizer during tight windows and so delay fertilizer purchases.

Coppock stated, “There will be many people who wait to see.” Coppock said, “But” if people are scrambling to get enough food in the spring, then somebody’s corn will not get covered.

Jim Zimmerman from Wisconsin decided to act and buy all his fertilizer this spring.

Zimmerman stated, “It is next year’s price I am concerned about.” It can get worse.

Nutrien The largest U.S. farmer supplier (NYSE:) Ltd has received less fertilizer for spring delivery than normal because less is being made available by manufacturers, according to Jeff Tarsi. According to Tarsi, sales to farmers may be more close to spring than ever before.

Kreg Ruhl from Growmark in Illinois, who is responsible for crop nutrients management said that the only nitrogen product running out in North America right now is Urea Ammonium Nitrate (UAN). UAN can be applied in a liquid form, which is more convenient for farmers.

At the request of CF Industries, a U.S. manufacturer (NYSE:), the U.S. International Trade Commission has launched an investigation on anti-dumping related to UANs from Russia and Trinidad and Tobago.

Ruhl indicated that many importers will be reluctant to accept shipments for 2022 as they might have to pay retroactive duty if CF wins.

There is no evidence farmers plan to plant more corn or soybeans, which could lower their fertilizer consumption.

U.S. Department of Agriculture predicted that corn plantings in the United States would fall to 92,000,000 acres by 2022 from 93.3million in 2021.

Matt Conacher, Senior Fertilizer Manager at Federated Cooperatives Limited (a Canadian wholesaler), said that waiting until spring could be disappointing for some farmers.

“My recommendation is to make sure you get your fertilizer today.”