High Nitrogen Fertilizer Prices Risk Spring Planting Season

A global shortage of nitrogen fertilizer is causing the prices to soar to record levels, and many farmers have decided to delay purchases until spring, raising the danger of a spring scramble to apply the nutrient before planting season. Farmers apply nitrogen fertilizer to corn, canola and wheat to boost yields. Higher fertilizer costs could cause higher prices in meat and bread.

Global food prices hit a ten year high in October, mainly because of high prices of cereal crops and vegetable oil. On the other hand, the United States fertilizer production has been affected by adverse weather like the Texas Arctic Blast in February and Hurricane Ida in August. On top of that, prices of natural gas, key for fertilizer production, have soared in Europe. Global urea prices have reached $1,000/tonne for the first time this month.

Currently, nitrogen fertilizer supplies are adequate in the United States for applications before winter. Many farmers apply fertilizer in winter to reduce spring workload. However, as prices keep rising, farmers have been reluctant to purchase the fertilizer now, risking a scramble of supply in spring, the busiest time of the year. If farmers rush to apply fertilizer in spring and plant seeds during a tight window, further supply chain congestions could occur.

The U.S. Department of Agriculture estimates that corn plantings in the U.S. would decline to 92 million acres in 2022 from 2021’s 93.3 million.

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