Monday, November 29, 2021

C&EN: Fertilizer prices are shooting up

Via this week's Chemical and Engineering News (article by Matt Blois), this inflation story: 
Strong demand and the high cost of raw materials have dramatically increased the price of fertilizer in 2021.

In Illinois, the price of diammonium phosphate, the most widely used phosphate fertilizer, rose by more than 78% over the past year, according to a Nov. 4 report from the US Department of Agriculture. The price of two nitrogen-based fertilizers, anhydrous ammonia and urea, more than doubled over the same period. Much of the price increase has happened since the beginning of October.

The cost of natural gas, which is used to make many fertilizers, has been increasing, especially in continental Europe and the UK. In addition, Hurricane Ida shut down some fertilizer production in the US earlier this year. And power outages caused problems for fertilizer plants in China, prompting the country to start discouraging fertilizer exports to protect its own supply.

On earnings calls in early November, executives at the US fertilizer makers CF Industries, Mosaic, and Nutrien said all of those factors contributed to the recent spike in fertilizer prices.

On the other side of the equation, prices for major crops like corn and soybeans are also very high right now. Gary Schnitkey, an economist at the University of Illinois who analyzes farming costs, says farmers are eager to take advantage of those prices, which is increasing demand for fertilizer to be used this fall and next spring.

The price of chemical inputs (especially natural gas) has been fascinating to watch over the last year. Will be interesting to see if there is an end in sight for this increase (I guess we'll watch the price of natural gas to be sure?) 

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