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U OF ILLINOIS ECONOMISTS ANALYZE HIGHER FERTILIZER PRICES
Apr. 22, 2021
Source: blog by Gary Schnitkey, Krista Swanson, and Nick Paulson, Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf, Department of Agricultural, Environmental and Development Economics, Ohio State University
To view the complete report, click here.
Fertilizer prices have increased since fall 2020. These price increases lead to rising fertilizer costs for farms, with the timing of fertilizer purchases impacting the level of fertilizer costs associated with 2021 production. Overall, fertilizer cost increases are larger for corn than for soybeans. History would suggest that fertilizer price increases will persist until corn and soybean prices decline.
Fertilizer Price Increase Since Fall 2020
Prices of nitrogen, phosphate, and potash fertilizers have increased dramatically since last Fall (see Figure 1). Anhydrous ammonia provides nitrogen requirements on Illinois farms. In its September 10, 2020 report entitled Illinois Production Costs, the Agricultural Marketing Service (AMS) reported the average ammonia price in Illinois at $432 per ton, the lowest level since Fall 2017.
The 2017 and 2020 fall prices were the lowest in the last ten years for anhydrous ammonia (see Figure 1). Since September, anhydrous ammonia prices have exhibited continual increases, reaching $691 per ton on April 8, 2021. From September 10, 2020, to April 8, 2021, anhydrous ammonia prices increased by $259 per ton or 60%.
From September 10, 2020, to April 8, 2021, AMS reported an increase in Diammonium Phosphate (DAP) from $414 per ton to $638 per ton, an increase of $224 per ton, or 54%. DAP prices are now at their highest level since December 2011 (see Figure 1). As 46% of its weight is phosphate, DAP is used by many Illinois farmers to provide phosphate requirements. Eighteen percent of DAP's weight is in nitrogen, thereby also providing nitrogen.
Potash, used mainly to provide potassium, increased in price from $332 per ton in September 10, 2020 to $435 per ton on April 8, 2021, an increase of $103 per ton, or 31%. Potash prices are now the highest they have been since September 2015.
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