(NASHVILLE, TN)– As grain prices continue to slump lower amid the weight of projected big crops this fall, many crop input prices are not showing the same declines. That includes many inputs on the fertilizer side of the industry.
Speaking on Tuesday’s episode of Agriculture of America (AOA), StoneX VP of Fertilizer Josh Linville shared that the fertilizer market is in a bit of a stalemate at the moment.
“I think the market has finally succumbed to the fact that grain prices are low and they don’t look like you got a rebound and that’s probably the biggest thing the market is trying to change,” according to Linville. “It’s (the fertilizer market) gotten used to even when things got a little rough, which they have over the last couple of years, typically events have happened to kind of pull the market out from the slump that it was. There was always some black swan event. There was always a rally in grain prices. There was some event that salvaged the situation. That’s not been the case this time.”
Linville says that many farmers are talking about how their cashflow for 2024 and 2025 is not good right now and so they see no reason to lock in any fertilizer inputs at the moment. And that’s even with the prospect of global events, such as wars and other supply shocks, driving prices higher in the weeks and months ahead.
When asked if farmers could pullback on various fertilizer inputs, Linville says he doesn’t expect that on the nitrogen side.
“If you’re going to go out there and plant corn and corn is king across North America, if you’re going to plant corn and you want to maximize your yield, which is probably your best chance of making money, you’ve got to have that nitrogen out there. Now we’ve got to talk about the timing of that. Uh, when are they going to apply it? Are we going to see fall anhydrous be as good as it usually is because of the cashflow situation, or is everybody gonna wait till spring? So we think demand’s going to be good.”
Linville does add that he thinks potash is very well priced currently versus grain pricing. However, there is one segment of the fertilizer market that is of concern.
“Phosphate’s the one that scares me,” says Linville. “That price is extremely high. When you look at that ratio between the corn and the phosphate values, some of the worst easily within the top 25 percent of the worst value to the farmer. Going back to 2018, if I ran that graph all the way back to 2005, it’s still being in the top 25%. It’s in very, very bad shape. We do think it’s going to impact demand here in the US. End of the day, I think it’s probably the first thing in line. As far as inputs go, the farmer’s going to look at and say, if I’ve got to make a cut to save cash, phosphate is going to be the very first in line.”
You can hear the full conversation between Josh Linville of StoneX and Jesse Allen on this past Tuesday’s episode of AOA below:
