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Fertilizer Prices Down From 2015

Evaluate potential return when investing in 2016 crop nutrition.

In-field fertilizer truck

Many growers haven’t been pricing any fertilizer lately and will likely be in for a pleasant surprise as they make plans for next spring’s crop. Since spring 2015, prices for Nitrogen (N), Phosphorus (P), and Potash (K) have been trending down. Several factors have moved the cost of N and K an average 10-12% lower today compared to the same time last year. For example the price of urea, 46% N, has dropped over $80/ton since the end of May. Muriate of Potash (60% K) has dropped by nearly the same amount. Only Phosphorus fertilizers have remained at about the same levels we saw last spring.

With the large reductions we’ve already seen in N and K those prices are expected to hold at or near current levels for the near term. The same is true for P. Market fundamentals as we move into spring, barring any unforeseen circumstances, don’t lead us to expect any major increases in price. We do however typically see prices begin to increase as the heavy spring demand picks up. And while some of the logistics problems from the past couple of years have improved, mainly the barge and rail transportation situation, we still expect truck transportation to be stretched to the limit. To ensure your crop nutrient needs are covered and purchased at acceptable price levels, growers should plan their spring needs as soon as possible. Your Southern States dealer can provide help with this process. Fall or winter applications will ensure you’re ahead of any spring weather or logistics delays and any spring price increases.

In the quest for profitability when faced with lower crop prices, planning for 2016 may start with growers considering cutting variable costs, such as buying a cheaper seed variety or cutting fertilizer application rates. While this may look like a good strategy on the surface, fixed costs for equipment, labor, depreciation, and land rent don’t change and the reduction in yield that will likely occur results in even lower profit per acre. The best approach is to shoot for a lower cost of production per bushel or pound of whatever crop you’re producing. Would you be willing to spend $5 if you’d get back $16 in return? With corn expected to be around $4.00 per bushel, a small additional investment like $5/acre in crop nutrients, a better yielding hybrid, or improving your soil health could likely result in 4 more bushels per acre, a $16 return on that $5 investment. Remember that yield is the driver for increased profitability.

Look to your Southern States Professional for help with the planning necessary to make this process successful. The best way to begin is with a field soil test and a review of last years’ production plan to help decide how best to improve profitability with higher yields. Southern States has a variety of tools available to take every grower to the next level.

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