In a nutshell the industry can tell you what ever it wants in reality low prices for our products mean less use of inputs, don't let the companies fool you they know were going to cut back and they wont sell as much so that's why they want to increase the price to offset the loss of sales. Because their is no reason in the world for fertilizer to go up this fall higher than last years price. No reason at all. Just a corrupt system with no checks and balance. Its farmers against them remember that they don't care about you its just a sale.
U.S. farmers are cutting back on spreading fertiliser this autumn in response to a drop in crop prices to multi-year lows and a delayed harvest, dealers say, warning of a pullback that will be felt from grain markets to Canadian potash mines.
Ten of 12 U.S. farm retail companies surveyed by Reuters say fertiliser sales this autumn are lower than they were last year. The dealers, which span the country's main growing areas, sell fertiliser, seed and chemicals.
Reductions in fertiliser use of an estimated 10 to 50 percent by volume could hit profits of producers such as Potash Corp of Saskatchewan (POT.TO) and Mosaic Co (MOS.N) since U.S. buyers typically pay a premium for some fertilizers such as potash.
Lower fertiliser use in the world's biggest corn-growing country could also point to smaller yields and reduced U.S. corn production in 2015, depending on weather and the size of the planted area.
Some U.S. dealers say there is still time for fertiliser sales to recover to last year's levels once farmers complete the harvest. But others fear a slump that could stretch into 2015 as low crop prices push purchases out of reach.
"We're having customer after customer telling us they're having trouble with their banks," said Randy Stephens, president of Texas-based SureGrow Ag Products. He sees farmers cutting back by as much as 50 percent on autumn fertiliser usage.
Farmers also face dwindling credit availability based on projections that prices for next year's crops will remain weak, he said.
Chicago nearby corn futures Cc1 earlier this month touched their lowest price since 2009 on expectations for the biggest harvest ever.
Dealers said farmers are likely to cut back on all three major nutrients - potash, phosphate and nitrogen - but especially potash and phosphate, which are not typically applied every year.
Joe Dillier, director of plant food at Growmark, a cooperative organisation that spans 30 states, said fertiliser orders have been "non-existent". But he expects a sales drop of only 10 percent as big yielding crops strip the soil of nutrients.
Farmers apply fertiliser from late October into early December, depending on the region, once the harvest is complete. The U.S. Department of Agriculture said on Oct. 14 that only 24 percent of corn was harvested, compared with the normal pace of 43 percent.
While corn, wheat and soybean prices fall, wholesale prices for granular potash and granular urea in the U.S. corn belt were up 7 and 13 percent year over year as of Oct. 10, according to data posted by Mosaic.
"There's going to be some cutbacks because (crop) prices are poor and inputs are too high," said Ralph Price, agronomy manager at Meadowland Farmers Co-op in Lamberton, Minnesota, who expects orders to fall 20 percent this fall.
Not all dealers are so bearish. The reduction in sales is likely to be modest because farmers will have good cash flow after the harvest, said Bill Wolf, president of the plant nutrient group at Andersons Inc (ANDE.O).
CUTTING BACK RISKY
Fertiliser producers have acknowledged the possibility of a demand drop-off, but emphasise that farmers risk smaller crops and profits by cutting back.
"This was a gigantic crop produced in the U.S. With that, there was a lot of phosphate and potash taken out of the soil," Mosaic Chief Executive Jim Prokopanko said in a Sept. 30 interview. "That has to be replenished."
Agrium Inc (AGU.TO), which produces fertiliser and operates North America's biggest farm retail network, expects a normal fall application season, depending on when harvest wraps up, spokesman Richard Downey said.
Mosaic recently cut phosphate production due to rising costs, and Agrium warned its final two quarters of 2014 would miss profit expectations.
Potash Corp will be the first North American fertiliser company to report third-quarter results, on Oct. 23. Analysts expect earnings similar to those of a year earlier, when the potash market was reeling from diving prices.
"We see the pressure of lower grain prices building (and) that should slowly erode nutrient prices and share value," Cowen Securities analyst Charles Neivert said in a note on Oct. 10.
A possible shift in planted acres next year from corn to soybeans, a crop that uses less fertiliser, may also crimp demand.
When sales to farmers dry up, retail dealers usually stock less inventory from wholesalers, a group that includes CF Industries Holdings Inc (CF.N) and Koch Industries Inc [KCHIN.UL]. But with huge crops backing up the transportation of many commodities, some dealers are buying supplies when they can.
"I've never seen a year where you can't get product into our places and then once you get it here, you don't know if you can sell it to anybody," said Meadowland's Price.
U.S. farmers are cutting back on spreading fertiliser this autumn in response to a drop in crop prices to multi-year lows and a delayed harvest, dealers say, warning of a pullback that will be felt from grain markets to Canadian potash mines.
Ten of 12 U.S. farm retail companies surveyed by Reuters say fertiliser sales this autumn are lower than they were last year. The dealers, which span the country's main growing areas, sell fertiliser, seed and chemicals.
Reductions in fertiliser use of an estimated 10 to 50 percent by volume could hit profits of producers such as Potash Corp of Saskatchewan (POT.TO) and Mosaic Co (MOS.N) since U.S. buyers typically pay a premium for some fertilizers such as potash.
Lower fertiliser use in the world's biggest corn-growing country could also point to smaller yields and reduced U.S. corn production in 2015, depending on weather and the size of the planted area.
Some U.S. dealers say there is still time for fertiliser sales to recover to last year's levels once farmers complete the harvest. But others fear a slump that could stretch into 2015 as low crop prices push purchases out of reach.
"We're having customer after customer telling us they're having trouble with their banks," said Randy Stephens, president of Texas-based SureGrow Ag Products. He sees farmers cutting back by as much as 50 percent on autumn fertiliser usage.
Farmers also face dwindling credit availability based on projections that prices for next year's crops will remain weak, he said.
Chicago nearby corn futures Cc1 earlier this month touched their lowest price since 2009 on expectations for the biggest harvest ever.
Dealers said farmers are likely to cut back on all three major nutrients - potash, phosphate and nitrogen - but especially potash and phosphate, which are not typically applied every year.
Joe Dillier, director of plant food at Growmark, a cooperative organisation that spans 30 states, said fertiliser orders have been "non-existent". But he expects a sales drop of only 10 percent as big yielding crops strip the soil of nutrients.
Farmers apply fertiliser from late October into early December, depending on the region, once the harvest is complete. The U.S. Department of Agriculture said on Oct. 14 that only 24 percent of corn was harvested, compared with the normal pace of 43 percent.
While corn, wheat and soybean prices fall, wholesale prices for granular potash and granular urea in the U.S. corn belt were up 7 and 13 percent year over year as of Oct. 10, according to data posted by Mosaic.
"There's going to be some cutbacks because (crop) prices are poor and inputs are too high," said Ralph Price, agronomy manager at Meadowland Farmers Co-op in Lamberton, Minnesota, who expects orders to fall 20 percent this fall.
Not all dealers are so bearish. The reduction in sales is likely to be modest because farmers will have good cash flow after the harvest, said Bill Wolf, president of the plant nutrient group at Andersons Inc (ANDE.O).
CUTTING BACK RISKY
Fertiliser producers have acknowledged the possibility of a demand drop-off, but emphasise that farmers risk smaller crops and profits by cutting back.
"This was a gigantic crop produced in the U.S. With that, there was a lot of phosphate and potash taken out of the soil," Mosaic Chief Executive Jim Prokopanko said in a Sept. 30 interview. "That has to be replenished."
Agrium Inc (AGU.TO), which produces fertiliser and operates North America's biggest farm retail network, expects a normal fall application season, depending on when harvest wraps up, spokesman Richard Downey said.
Mosaic recently cut phosphate production due to rising costs, and Agrium warned its final two quarters of 2014 would miss profit expectations.
Potash Corp will be the first North American fertiliser company to report third-quarter results, on Oct. 23. Analysts expect earnings similar to those of a year earlier, when the potash market was reeling from diving prices.
"We see the pressure of lower grain prices building (and) that should slowly erode nutrient prices and share value," Cowen Securities analyst Charles Neivert said in a note on Oct. 10.
A possible shift in planted acres next year from corn to soybeans, a crop that uses less fertiliser, may also crimp demand.
When sales to farmers dry up, retail dealers usually stock less inventory from wholesalers, a group that includes CF Industries Holdings Inc (CF.N) and Koch Industries Inc [KCHIN.UL]. But with huge crops backing up the transportation of many commodities, some dealers are buying supplies when they can.
"I've never seen a year where you can't get product into our places and then once you get it here, you don't know if you can sell it to anybody," said Meadowland's Price.
Comment