Fertilizer prices at record highs, but most don’t change their plans |
Mark Mueller’s spring fertilizer bill reflects the price spike many farmers are feeling in the Midwest.
The Bremer County, Iowa farmer said his anhydrous spring applications cost him more than triple what he spent last year. The silver lining, Mueller said, is today’s high commodity prices.
“Everything is going to be terribly expensive this year, but corn prices allow us to make it work economically,” Mueller said.
The concern he has is what happens when prices inevitably reverse course.
“These prices will come down quickly, but input prices will go down very slowly,” he said.
Those concerns aren’t limited to northeast Iowa, said Marty Marr, a farmer from Morgan County, Ill., and president of the Illinois Corn Growers Association. Marr applied much of his fertilizer in the fall, and many farmers changed their fertilizer plans for the season.
“Some people may have wanted to do split apps,” Marr said. “The uncertainty kind of forced our hand and we submitted our applications in the fall. Considering the uncertain future of availability, even, it seemed that at the start of the year, a perfect storm was brewing.
As the spring of 2022 rapidly approaches, the national average anhydrous price was $1,488/ton as of February 25, with Iowa averaging $1,522 and Missouri averaging $1,503. The Illinois average has not been updated to the latest DTN index.
Marr said the surprising aspect of the price increase is how quickly everything has gone up.
“What’s amazing is how fast it’s increased,” Marr said. “The price was moving quite aggressively. That eroded some of last year’s margin because you’re doubling your fertilizer prices if you stick to your normal schedule. »
Rising fertilizer costs are leading farmers to consider changing their acreage this growing season, with corn looking considerably more expensive to grow than soybeans. However, many farmers still find prices fair enough not to switch drastically to soybeans. Robb Ewoldt, an eastern Iowa farmer and president of the Iowa Soybean Association, applied his fertilizer last fall and said he doesn’t plan to make many changes to his fields this year.
“When you look at the percentage of inputs in the crop, it’s not a big change,” he said. “When I can sell off-field corn for $5.80, I think I can pay 20, 30, or 50 percent more for herbicide because it’s still going to be profitable. It still works.”
Ewoldt spoke with producers in the Midwest and said the general consensus was that few people were going to adjust their acres.
“Those who saw this coming bought ahead,” he said. “Those that can move acreage due to input costs could be the smaller farms that haven’t prepaid or booked in advance. There was even talk of going to beans on beans, but it never ended well for me.
In Linn County, Iowa, farmer Dan Voss said he was able to get his anhydrous last August for nearly $740 a ton, and although it was part of his normal schedule, he knew the prices would increase. This led to some additional purchases.
“I booked a bunch of P’s and K’s early, and I don’t always do that,” Voss said. “It worked.”
He said his operation usually adds potash after the first cut of hay and usually buys some in late fall or winter. This year, he is waiting to see if prices will eventually come down before making those purchases.
Marr said that ultimately farmers are learning together because costs and prices are at historically high levels. He said there have been challenges before, and this is another that farmers will be able to overcome.
“We’re in an area that we haven’t seen very often,” he said. “We’re looking at $16 beans and maybe $6-7 corn. As my father always said, you have to make the most of what you have each year.