Photo by Etienne Girardet on Unsplash
 

On average, over 20% – or about $200 – of input costs to grow an acre of corn is expected to be spent on fertilizer in 2023. The cost is, however, down 3% from 2022, according to this projection. From 1997 to 2021, the total cost per acre more than doubled – from $324 per acre in 1997 to $777 per acre in 2021.

The prices for anhydrous ammonia, diammonium phosphate, and potash all rose beginning late in 2020. Early in 2022, anhydrous got up to nearly $1,600 per ton. Urea topped $1,000, MAP reached over $900, and potash reached $800. Anhydrous has since moved down to $1,200. MAP is below $900, and potash is down to below $600 to 562.50 (as of February 28, 2023, according to YCharts).

Last year chemical fertilizer prices surged due to the geopolitical confrontation in Eastern Europe, where Russia, Ukraine, and Belarus traditionally dominate the potash, phosphorus, and nitrogen fertilizer markets, which were hurt by trade disruptions from Russia and Belarus. In addition, U.S. Federal Reserve policies that responded to Covid in 2020 caused a big increase in the money supply.

In late February – the first half of March this year, the retail prices of chemical fertilizers continued to decline. The trend has been going on for several months. The prices of the eight major chemical fertilizers all fell on a monthly basis. Prices of 5 out of 8 types of fertilizers fell sharply. 

Thus, UAN28 led the decline again. Nitrogen fertilizers fell by 14% MoM, with an average price for this commodity at US$444/ton. Anhydrous fell 12% per month, with an average price of $1,077/ton. UAN32 fell 10% from the previous month, with an average price of US$525/ton. In its turn, urea was 7% cheaper than last month, with an average price of $648/ton. Compared with the previous month, potash fertilizer prices eased by around 5%.

The remaining three fertilizers are only slightly lower than last month. DAP averaged $827/ton, MAP $827/ton, and 10-34-0 $741/ton.

Based on the price per pound of nitrogen, the average price of urea is $0.70/lb.N, anhydrous urea is $0.66/lb.N, 28 UAN is $0.79/lb.N and 32 UAN is $0.82/lb.N.
 

Summary 

As long as commodity prices stay strong being impacted by anticipations of the turnaround of Fed monetary policy, fertilizer prices will revert into ascending trajectory, too. However, the good news for farmers, is that at least Covid-borne supply bottlenecks greatly eased in recent months, which resulted in the healthier international competition among the main producers. This is the main reason why fertilizer prices are substantially off their 2022 peaks, helping contain general grain price inflation.

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