Rushville Republican

Agriculture

September 27, 2013

Ag economist: 2013 a transition year for grain farmers

(Continued)

Nitrogen prices also are falling because the U.S. is now a low-cost producer. North American fertilizer producers are expecting historically strong sales this fall.

During the height of the ethanol boom, farmers were growing more corn and using more nitrogen. Plus, natural gas prices were high. Since then, natural gas prices have fallen, which has led to renewed interest in investing in domestic production capacity for nitrogen fertilizers. This leads to greater supplies of U.S.-produced nitrogen in the future if the cost of producing it here stays well below its market price as it is now.

“Corn growers really will start to see the full effect of more domestically produced nitrogen in 2015,” Miller said. “We have been importing more than 50 percent of our nitrogen fertilizer, meaning supply disruptions could easily impact prices. As we produce more of our own, we will import less. The bigger supply will benefit corn producers.”

Recent prices for nitrogen in anhydrous ammonia form have hovered around $700 per ton. According to Miller, that could possibly eventually fall to as low as $400 or $500 per ton if U.S. production capacity increases considerably.

One area where farmers won’t see price relief is seed costs. By Miller’s estimates, some seed could be up by 2-3 percent or more for the 2014 planting season.

“Seed is not the place where growers will cut corners to try to save money,” he said. “They will be careful in pricing inputs, but they want the technology to produce the best crop possible.”

The prices of chemicals, such as herbicides, pesticides and fungicides, are likely to be a mixed bag. For the most part, chemical prices will be up slightly - about 1 percent, according to Miller. The exception is herbicide, where prices will remain flat.

Prices for fuels commonly used on the farm currently are expected to be down in 2014. The costs for both diesel, which powers most farm machinery, and propane, which farmers use to power grain dryers, could be down by about 4 percent.

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