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Fertilizer costs will be lower in 2014
Fertilizer costs likely will decline in 2014, providing crop producers with some relief from projected lower crop revenues, according to Gary Schnitkey, University of Illinois ag economist. However, while Illinois fertilizer costs may be down by $60 per acre, lower corn prices may mean crop revenue may be down by more than $300 per acre.
From 2006 to 2013, fertilizer costs rose substantially, increasing by 144% for corn and 161% for soybeans. Since September of 2013, fertilizer prices have declined, likely leading to lower fertilizer costs for into the 2014 production year.
On Jan. 23, 2014, USDA’s Agricultural Marketing Service reported average prices in Illinois of $651/ton for anhydrous ammonia, $521/ton for DAP, and $449/ton for potash. These 2014 prices are below 2013 levels by approximately 27% for anhydrous ammonia, 19% for DAP, and 21% for potash.
While 2014 price declines are large, further downward pressure may exist on fertilizer prices. Additional plant capacity to produce anhydrous ammonia is being placed into operation. Cartel alliances relative to potash have broken up.
Current prices reported by the Agricultural Marketing Service would result in lower fertilizer costs in 2014 as compared to 2013. Using projected price decreases reported above fertilizer costs for corn would be around $140/acre, down $60 per acre from 2012 levels. Fertilizer costs for soybeans in 2014 would be at $50 per acre, down from $68 per acre in 2012. Even with these cost decreases, evaluating the level of fertilizer applications may be advisable, perhaps lowering application rates given recent price changes.