‘Nitrogen and phosphate prices have been rising throughout 2021,’ says Ryan Furtas, market analyst with Alberta Agriculture and Forestry. ‘Strong demand, rising raw material prices, supply constraints and inflation have combined to increase retail fertilizer prices over recent months.’
Demand for fertilizer has increased in 2021. High agriculture commodity prices have led to an increase in crop input expenditures, primarily driven by a global acreage expansion.
Global demand for nitrogen products in 2021 has removed any excess supply from prior years. Meanwhile, production struggled to keep up with expanding acres amid COVID-related supply chain interruptions. The 2021 market rally for energy commodities saw raw materials such as natural gas and coal steepen the nitrogen production cost curve. In addition, nitrogen producers incurred increased costs throughout their supply chain.
‘For Alberta farmers, the cost of nitrogen products required for the 2021 crop began to increase in the last couple months of 2020 (see figure 1). Alberta urea prices were $498/metric tonne (mt) in November of 2020 and, since then, urea has climbed higher by $85/mt to the April/May price of $583/mt.’
Comparing year over year spring prices, in the spring of 2020 urea averaged $525/mt, whereas 2021 spring averaged $583/mt, an increase of $58/mt or 11% year over year.
‘Despite the spring of 2021 having the highest urea price in the past five years, the $583/mt high is not far above 2019 spring values of $566/mt, or 2017 spring prices when urea was priced at $540/mt,’ explains Furtas.
Figure 1. Alberta urea (46-0-0) nitrogen dollars per tonne (mt)
‘There is a very similar explanation to higher phosphate prices,’ points out Furtas. ‘Expanding international acreage is driving higher global demand. Raw material prices for phosphate increased, supply chains were disrupted and ocean freight costs increased. An added complication to the phosphate story is U.S. countervailing tariffs on top producers Russia and Morocco, which has meant that global production has been operating below capacity for the past several months.’
Alberta phosphate began its price climb in the fall of 2020. In November, the price of Alberta phosphate averaged $682/mt. Fast forward to May 2021, and phosphate averaged $883/mt (see figure 2).
Comparing the year over year spring prices for Alberta phosphate, spring 2020 phosphate averaged $675/mt, whereas 2021 spring averaged $880/mt, an increase of $205/mt or 30% on a year over year basis.
‘Spring phosphate prices averaging $880/mt is certainly the highest in the past five years. The next closest was spring of 2016 when phosphate averaged around $800/mt, and spring of 2019 when phosphate averaged $765/mt.’
Figure 2. Alberta phosphate (11-51-0) dollars per tonne (mt)
‘Even though prices of fertilizers have increased, thankfully supply shortages were not an issue in Alberta,’ says Furtas. ‘There were many indicators throughout the winter that fertilizer prices were headed higher.’
Furtas adds fertilizer analysts expect farm input prices for crop nutrients to remain high throughout 2021. Global demand for agricultural fertilizers are going through a period of growth in response to high commodity prices and resulting acreage expansion.
For more information, connect with Ryan Furtas:
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