Top 10 Ag Stories of 2021: No. 3

Increasing Fertilizer Demand, Less Supply Combine to Push Retail Prices Higher in 2021

Russ Quinn
By  Russ Quinn , DTN Staff Reporter
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Several supply and demand factors pushed retail fertilizer prices to historically high levels in 2021. (DTN chart)

Editor's Note:

Each year, DTN publishes our choices for the top 10 ag news stories of the year, as selected by DTN analysts, editors and reporters. Today, we continue the countdown with No. 3: Fertilizer prices skyrocketing significantly higher in 2021, thanks to several different factors affecting demand and supply.

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OMAHA (DTN) -- The year 2021 was notable for several events, but for many involved in agriculture it will be remembered as when retail fertilizer prices skyrocketed historically higher. Many factors came together in 2021 to cause increased fertilizer demand and less nutrient supply.

As a fertilizer analyst said in an interview in November, just about everything bad that could happen to the fertilizer market in 2021 happened.

A PERFECT STORM

Retail fertilizer prices began to rise at the end of 2020 and by the beginning of 2021 prices had increased just slightly. With higher commodity prices as incentive, farmers applied more fertilizer in spring.

The increased applications of nutrients drained most of the supply channels and the refill fertilizer prices were higher. With a rise in commodity prices, a rise in fertilizer prices should be expected.

In February, a polar vortex sent temperatures tumbling across the United States and power outages were common in parts of the south, especially in Texas and Louisiana. Fertilizer-producing facilities in Louisiana were among the plants that saw a prolonged shutdown because of frozen water pipes and no electricity.

Then, in March, the U.S. International Trade Commission (USITC) ruled that phosphate fertilizer imports from Morocco and Russia have affected the U.S. market (https://www.dtnpf.com/…). Fertilizer producer Mosaic pushed for the decision and countervailing duties of 9% to 47% were to be applied.

Mosaic, however, has stated other global issues also pushed fertilizer prices higher. Some groups, such as the National Corn Growers Association (NCGA), disagree (https://www.dtnpf.com/…).

Hurricane Ida hit the Gulf Coast region the last few days of August and the first few days of September. Much like the polar vortex in February, the hurricane caused great damage in the area and once again closed for a few weeks the facilities that produce fertilizer.

In September, as global fertilizer prices continued to climb, China announced it would stop phosphate exports until June 2022 at the earliest (https://www.dtnpf.com/…).

As if all of this wasn't enough, increasing energy costs have led the cost of producing fertilizer to increase dramatically as well. This was especially evident in Europe where fertilizer manufacturers shut down facilities due to unfavorable margins (https://www.cfindustries.com/…).

Josh Linville, director of fertilizer at StoneX Financial, said the world saw a very high number of issues which affected the global supply and demand of nutrients in 2021.

"We just saw so many supply issues in 2021," Linville told DTN. "If something could go wrong, it went wrong in 2021."

FERTILIZER PRICES CLIMB IN 2021

As a result of the various demand increases and supply disruptions, retail fertilizer prices climbed to historically high levels in 2021. Nitrogen fertilizers such as anhydrous, urea, UAN28 and UAN32 are now at all-time highs, according to DTN data.

The prices for the third week of December show an anhydrous average price at $1,424/ton, urea $910/ton, UAN28 $583/ton and UAN32 $679/ton -- all-time highs for all of them -- within data DTN has collected. Anhydrous is 208% higher from a year ago, urea is 151% more expensive, UAN28 is 178% higher and UAN32 is 171% more expensive.

While the other half of the eight major fertilizers are not at record high prices, these fertilizers have also seen a dramatic increase in their price.

DAP has an average price of $862/ton, MAP is at $932/ton, potash is at $807/ton and 10-34-0 is at $791/ton. DAP is 82% higher from a year ago while MAP is up 74%, potash is 121% higher and 10-34-0 is now 71% more expensive.

Looking forward to 2022, fertilizer analysts believe these higher prices could be present for most of the New Year. With more production coming back into the market, fertilizer prices could see a decline in the second half of 2022.

DTN recently published a Global Fertilizer Outlook series.

For the nitrogen outlook, click here:

https://www.dtnpf.com/…

For the phosphorus outlook, click here:

https://www.dtnpf.com/…

For the potash outlook, click here:

https://www.dtnpf.com/…

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Editor's Note:

You can find No. 10 in DTN's top 10 list at https://www.dtnpf.com/….

You can find No. 9 in DTN's top 10 list at https://www.dtnpf.com/…

You can find No. 8 in DTN's top 10 list at https://www.dtnpf.com/…

You can find No. 7 in DTN's top 10 list at https://www.dtnpf.com/…

You can find No. 6 in DTN's top 10 list at

https://www.dtnpf.com/…

You can find No. 5 in DTN's top 10 list at

https://www.dtnpf.com/…

You can find No. 4 in DTN's top 10 list at

https://www.dtnpf.com/…

Russ Quinn can be reached at russ.quinn@dtn.com

Follow him on Twitter @RussQuinnDTN

Russ Quinn