C.O.R.N. Newsletter 2008-35

Fertilizer Prices: How Did We Get Here, Where Are We Going, and What You as a Producer Can Do About It?

Authors: Robert Mullen, Keith Diedrick

Input costs (fertilizers, specifically) for production agriculture have been skyrocketing over the last couple of years and many producers were not really excited about paying the fertilizer bill this fall/winter, but in the past few months things have changed a little. Instead of looking into the crystal ball and trying to forecast what will happen, let's first understand what has happened in the last two years.

What is responsible for the current price situation? There were several factors at play that affected fertilizer prices over the last couple of years; it cannot be attributed to a single issue alone. For phosphorus and potassium fertilizers, one factor was increased commodity price. After commodity prices increased in the fall/winter of 2006 demand for fertilizer products increased the following year. Additionally, South America and eastern Asia increased their imports of both phosphorus and potassium. These events put severe pressure on fertilizer supplies.

For nitrogen products, natural gas, which makes up 80% of the cost of anhydrous ammonia, was increasing in price. Biofuel demand also had an impact on fertilizer nitrogen prices as more acreage was planted to corn. In the fall of 2007, the dollar was weakening substantially in the world financial market, making other countries more attractive for global phosphorus and potassium producers. Fuel price for material transport also increased rapidly. The convergence of these factors caused fertilizer prices to increase rapidly to the levels we have seen this past summer.

Fast-forward to October 2008, and what is going on now? First, commodity prices have fallen considerably from where they were at this time last year. Thus, many growers are far less interested in buying fertilizer (and for some you this is definitely the right decision), and demand is slightly lower. The dollar has also strengthened. So, in the last few months, nitrogen and phosphorus prices have dropped (not a tremendous amount, but any amount helps). This is especially true for urea. Potassium prices have and are predicted to remain steady due to tight supplies. Will prices fall more dramatically this fall? Good question, and unfortunately, we do not have a solid answer.

So, what are the long-term forecasts? It appears as if nitrogen and phosphorus prices will ease a little, but expect potassium prices to remain up until additional capacity becomes available in the next few years.

The real question is: what does this mean for you as a producer? For phosphorus and potassium management – soil test, soil test, soil test. This can save you a tremendous amount of money in fertilizer this year if your soil test levels allow. Ohio State University provides recommendations for both phosphorus and potassium in our Tri-State Fertilizer Recommendations (https://agcrops.osu.edu/fertility/). If you are above the maintenance range with regard to soil test levels, you do not have to supply phosphorus or potassium this year. Rely on what you have supplied historically to get you through the next crop rotation.

Purdue University has recently published an article that discusses drawdown levels for soils, and it is a good educational tool for those who do not understand soil phosphorus and potassium buffering (http://www.agriculture.purdue.edu/AgAnswers/story.asp?storyID=5050). Utilize Ohio State University’s Nitrogen Rate Calculator for making nitrogen decisions for corn production (https://agcrops.osu.edu/fertility/). Remember, even though the economic climate has changed dramatically, sound agronomics have not.

Title in Err, but Content Accurate

Authors: Ron Hammond

Last week an article appeared in this newsletter about aphids and their ability to vector barley yellow dwarf virus (BYDV) on wheat. Although the text of this article was okay, a mistake was made with the title "Soybean Aphids and Barley Yellow Dwarf." This title was wrong and misleading, and should have read "Aphids and Barley Yellow Dwarf." The soybean aphid, a major concern on soybean, plays absolutely no role in vectoring this virus in wheat, and cannot even survive on wheat. Aphids of concern in vectoring this virus on wheat include oat bird-cherry aphid, English grain aphid, and other species. We were able to correct this by mid-week. We apologize for any confusion this might have caused.

Corn Stover Baling - Phosphorus and Potassium Removal

[This article was written by Jim Camberato, Agronomy Dept., Purdue University, West Lafayette, IN 47907-2054 Email address: jcambera@purdue.edu as a Corny News Network article available on line at: (http://www.agry.purdue.edu/ext/corn/news/).]

Points to consider: 1) The value of phosphorus and potassium removed from the field when baling corn stalks; 2) A 150 bushel per acre corn crop produces about 2.5 tons of harvestable stover; 3) Each ton of dry stover contains about 3.6 pounds of P2O5 and 20 pounds of K2O; and 4) A ton of stover contains $18 of P2O5 and K2O at $0.75 per pound of these nutrients.

Corn stover baling removes valuable crop nutrients from the field. The amount and value of phosphorus (P) and potassium (K) in stover clearly should be considered a cost of stover baling. Other essential plant nutrients, such as nitrogen, calcium, magnesium sulfur, and the micronutrient are removed in the stover and may be figured into the nutrient cost of stover baling, especially in low nutrient soils and with long-term stover removal.

The amount of dry stover produced by a corn crop is approximately equal to the weight of grain at 15.5% moisture. Therefore, a 150 bushel per acre corn crop would leave about 4 tons of stover in the field. The usual assumption is that about 60% of the stover is gathered, approximately 2.5 tons per acre.

Corn stover contains about 3.6 lb P2O5 and 20 lb K2O on a per ton basis (based on stover concentrations of 0.18% P2O5 and 0.99% K2O). The 2.5 tons per acre removed from a field producing 150 bushels per acre contains about 9 pounds of P2O5 and 50 pounds of K2O. The value of these nutrients at current prices ($0.75 per pound of P2O5 or K2O) is about $44 per acre or $18 per ton of stover.

Crop residue is not only an important recyclable source of crop nutrients, it also helps reduce soil erosion and replenishes soil organic matter. Soil organic matter is responsible for many soil quality characteristics, such as soil structure, porosity, drainage, aeration, and water holding capacity. Corn stover removal eventually will lead to reduced soil quality through a reduction in soil organic matter. Compaction during stover removal is another factor that may reduce soil quality and should be minimized.

This article can be found at: http://www.agry.purdue.edu/ext/corn/news/articles.08/StoverNutrients-1010.html

Weather Update

Authors: Jim Noel

The expected pattern of dry going toward at least some wetting before returning to dry seems to be on track. We saw our first weak system this past Wednesday. It now looks like another system for midweek and another coming this weekend or early next week. Ahead of the first system will be near record warmth. Following these systems, it will return to near normal temperatures later in the week and into next week.

Overall, there is about a 50-60% chance of 0.5-1.5" of rain the next 1-2 weeks. Normal for the next 2 weeks is about an inch this time of year. This is based on our ensemble modeling which you can play with at this site: http://www.weatheroffice.gc.ca/ensemble/produits_e.html.

This week: Dry and warm early followed by a midweek storms and then drier and cooler. It also looks like a blast of chilly air this upcoming weekend with frost possible by Sunday a.m.
Next week: A storm early then drier and a warm-up next week.

Overall, still a very warm start to this week with some rain and cooler weather for later in the week. Rainfall normal to above normal this week and below normal next week again as we likely resume our below normal rainfall trend.

The long term trend of normal temperatures and below normal rainfall is still on track but I am watching for a trend toward possible normal rainfall beyond October.