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Fertilizer Perspectives: The Wild Roller Coaster

Sep 23, 2021

By: Terry Aukes, Seed Sales Manager

As you read this you may have heard lately or experienced last spring if you bought in season fertilizer prices have shown much strength in price.  This is due to several factors.  Higher grain prices lead to higher fertilizer prices due to higher usage.  Freight in general has increased in a post covid environment and the big one-countervailing complaints on foreign fertilizer have been brought to light have caused the biggest financial impact.  You may ask what is countervailing?  In this case Mosiac, one of the largest fertilizer manufacturers in the world brought an accusation to the U.S. Department of Commerce eight months ago and accused Morocco and Russia of illegally subsidizing and dumping fertilizer into the US market, thus causing financial harm to Mosiac.  Mosiac claimed in 2019 alone they incurred damages of $729.4 million for Morocco and $299.4 million for Russian. The U.S Department of Commerce agreed with Mosiac and thus imposed a countervailing or also called import tax on these foreign imports of fertilizer, particularly potash and phosphate.  For the next five years, the U.S Department of Commerce will issue duty orders of approximately 20% on Morocco and 9-47% on Russian imported fertilizer.  Unfortunately Morocco and Russian were our two largest importers of fertilizer.  This also means Mosiac now controls 88% of the market from a U.S point of view.

    What does this mean for fertilizer prices?  First, prices moved higher months ago on the thought of countervailing claims.  Import taxes of 9-47%  means those tons will more than likely not find their way to the U.S but will still be sold somewhere in the world.  Mosiac claims prices will not be affected much, but that is yet to be seen.  That also means new trade routes will need to be sorted out in the industry in the coming months to replace those tons.  This has concerns on supply timing as well as price concerns.  Unfortunately, there other fertilizer manufacturers now bringing or considering countervailing claims forward since Mosiac situation precedent has been set.      

You might be saying where is the good news in all of this if you have made it to this point?  I will tell you even though you will experience sticker shock at some point in buying fertilizer from last year there is one thing that remains consistent.  Your fertilizer dollars, although higher, will “take” about the same amount of bushels this year than last.  For example on 9-22-20 cash corn price in Inwood was $3.34 per bushel and a fertilizer analysis of a 150-80-70-24S “cost” you 33.27 bushels per acre.  This year using the exact same day corn price of $5.05 in Inwood and same analysis “costs” you 34.22 bushels per acre.  I will say the later is preliminary as CFE is still working on securing and sourcing all our needs but if the trend holds true we are very close to year over year.  Stay tuned to next month where I discuss ways to stretch those fertilizer dollars in this environment.


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