March 26, 2009
Fertiliser greater challenge than weather in spring season
The weather outlook doesn''t portend any substantial challenges for spring-planted crops, but fertiliser logistics could cause some headaches, analysts said Wednesday (March 25).
The analysts were featured speakers on TopProducer''s pre-planting and weather Webinar.
Given the proximity of planting efforts and the distance of foreign ureanitrogen supply, producers "have to live with what we have here," said Tim Chrislip of Agriliance, advising producers to "talk to dealers and know what they have in place for you."
Chrislip noted that forecasts of reduced anhydrous ammonia will add pressure to urea and urea ammonium nitrate stocks.
"The system will be maxed out; product will move sideways through the dealers and logistical issues are a certainty," Chrislip said.
While pricing has slipped in phosphate, potash has remained steady, but both are subject to logistical constraints as slow fall sales have reduced retailers'' abilities to transfer ideal fertiliser amounts into farmers'' hands, he added.
These issues may be exacerbated if the US Department of Agriculture predicts greater-than-expected corn acreage when it releases its prospective plantings report March 31 at 8:30 a.m. EDT. Corn requires more intensive fertilisation practices than soy.
"Corn competes pretty well with soy," said Jerry Gulke, owner of Strategic Marketing Services.
The market is acting like it doesn''t expect a big drop in corn acreage, he said.
"The market says is doesn''t need [corn] now, but it may later," Gulke said, noting that farmers may be wise to hold off selling on-farm stocks and hedging into 2010.
"If it''s a bullish crop report, then the December price might rally even further," he said.
Regarding soy, if farmers plant 81.5 million acres, as predicted by forecasting firm Informa, the market may have trouble getting rid of excess supply, Gulke added.
"When China is done buying and the South American crop is quantified, there is significant downside risk," he said.
Regardless of what crops gain acreage this spring, the weather forecast looks supportive in the near-term, though a dry winter does present challenges to the hard red winter wheat crop as it emerges from dormancy, said Fred Gesser, a Planalytics meteorologist.
Comparing the weather moving into planting this year and last is totally different, he said.
"To me it''s a much better, positive season ahead," he said.
