Todd's Take

It seems that everywhere you turn these days, we're learning about new innovations with lots of potential. Even if only a small number turn out to be workable, the future could look much different for both agriculture and energy markets. In 2022, we have seen a significant increase in the amount of soybean oil used to make renewable diesel. In 2023 and beyond, changes could prove even more dramatic.

On Twitter and in the media recently, I have noticed increased attention on companies promoting the use of nitrogen-fixing microbes as a way of reducing fertilizer use and the high costs that go with it. There is still much research to be done, but while DTN's National Anhydrous Index shows prices averaging over $1,400 per ton, more producers seem willing to give these products a try. A sales representative for Pivot Bio, who I talked to at the Peoria farm show in early December, explained he can't guarantee higher yields, but pointed to company research, which shows evidence of greater nitrogen uptake, even with reduced rates of fertilizer application (see https://info.pivotbio.com/…).

Pivot Bio is not the only company working with microbes, and big players are getting involved. On Nov. 30, Corteva announced the purchase of Stoller Group Inc. out of Houston, a provider of biologicals with $400 million of sales estimated in 2022 across 60 countries (see https://www.corteva.com/…).

Highlighting another new idea, I had an interesting conversation with Chet Edinger in South Dakota, who is working with a Spokane, Washington, company to buy 400 tons of ammonia for his farm at an estimated cost of $500 per ton, possibly less. Does that sound too good to be true? The company, Exactrix, is in the process of producing ammonia from wind energy throughout the western U.S. Plains with initial production set to start in 2025 (see more at http://www.greenplayammonia.com/…). Exactrix CEO Guy Swanson said in a podcast, soon to be released on No-TillFarmer.com, the first plant in Texas is expected to be able to produce ammonia at an onsite cost of $247 per ton. The company plans to eventually have a chain of production sites from Texas to North Dakota, an area favorable for wind generation and close to western producers where the ammonia can be locally distributed. As Edinger explained, "We feel on our farm it's a long shot ... but if it does work, we want to be first in line."

Exactrix is not the only company investing in green ammonia production. Many companies are benefiting from and applying University of Minnesota research that began a decade ago. Fertilizer producer CF Industries has a green ammonia project at Donaldsonville, Louisiana, that is supposed to produce 20,000 tons per year, starting sometime in 2023 (see https://sustainability.cfindustries.com/…).

The same process that Exactrix and CF Industries will be using to produce green ammonia is also a potential game changer for the world's energy supplies. As popular as the push for electric vehicles (EVs) is these days, EVs' limited ranges and need for recharging are not so practical on a farm that works nonstop at planting time and in all kinds of difficult conditions. Another problem is that EVs depend on electricity, which is still produced mostly by carbon fuels. For farm work and other heavy use, diesel is king, and practical substitutes are lacking.

Hydrogen is one possible fuel that could work for heavy machinery on a large scale but has significant hurdles to overcome. One of the biggest challenges for hydrogen is the difficulty storing and transporting this volatile gas. Ammonia, which is one part nitrogen and three parts hydrogen, offers a more practical way to store and transport hydrogen and could be the answer for making hydrogen fuel easier to use.

Several companies, including the world's largest oil companies, are investing heavily in hydrogen, prodded by generous incentives in the Inflation Reduction Act, passed in August 2022. Even before the bill was passed, Cummins Inc. showed off a new engine capable of accommodating different fuel types, including hydrogen (see https://www.cummins.com/…). With broad industry push, it seems a matter of time before hydrogen finds its way into the world's energy mix.

On a more subtle level, an email I received from the University of Nebraska-Lincoln last week explained new research they are taking the lead on. The email explains there is a seashore grass, paspalum vaginatum, a relative of maize, which is known for having a high tolerance to drought and extreme temperatures. It is also known for its ability to thrive in the absence of nutrients like nitrogen and phosphorous.

University researchers are learning a lot about the plant's unique abilities and are hoping to one day apply those genetic traits to corn. If you think a minute about what it might mean for the world to be able to grow corn in extreme conditions with little need for rain or fertilizer, I probably don't have to explain how dramatically different markets would become for corn, fertilizer, fuel and food production in general. You can read more about this research at https://www.nature.com/….

On the one hand, innovations like those described above are exciting and hold possibilities for a better future. On the other hand, big changes can be a bit frightening for those invested in the status quo. It is not so easy to know which ideas will flourish and which will flop, or who the losers and winners will be. Stay tuned next week as I try to offer practical market advice for how to protect farm finances during this time of great transition.

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of grain or grain futures or options involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman1

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