Time to buy fertilizer
There are some compelling reasons why farmers should be thinking seriously about their spring fertiliser requirements and buying at least some of their fertiliser now.
Compared to last year in the arable sector, nitrogen prices are down and cereal prices are up. While yields for growers remain a crucial unknown in this comparison, the economics for purchasing some fertiliser now do stack up.
For the livestock sector, while recognising milk pricing issues, if fertiliser storage is available, a policy of split purchase now, pre-Christmas, topped up with further purchases in the spring, will cover all options in an unpredictable market.
So what's the basis for this advice?
Picking the best time to buy fertiliser is a much more challenging decision than in the past. Market forces continue to move prices up, and down, and it is becoming increasingly difficult to determine market direction and timing.
Forecasting market trends in any agricultural commodity has become a rather tricky exercise in recent years.
The saying "the future ain't what it used to be" seems very applicable.
There is no straight answer to the question of when to buy – but a strategy of spreading the purchase to spread the risk is probably a good call and farmers do seem to have adopted that approach so far.
Talking of expense, what is going to happen to the price? Essentially it comes down to a matter of supply and demand.
If grain prices are high, farmers everywhere, from Derby to Delhi, Shrewsbury to Shanghai, will plant more and put more fertiliser on, increasing demand.
As fertiliser supplies cannot be increased as quickly as these surges in demand, fertiliser prices rise.
Wheat futures have risen 30 per cent since January, corn prices in the US are up by 24 per cent and there is little to suggest this situation will change.
On the supply side, a number of new fertiliser plants are scheduled to start – but they are unlikely to have much influence on supply until 2013.
Prices at the start of this season have remained flatter than usual, but are now showing signs of rising.
Continuing a policy of buying part of your order in different periods is a good one in an unpredictable market, whether that be for compounds or nitrogen.
Farming News Daily Supporting British Pig Farmers
Source: Argentine Beef Packers S.A.