 |
| CLICK HERE TO VIEW CURRENT ISSUE |
 |
| Best of NAMA 2026 |
|
 |
|
U OF ILLINOIS ECONOMIST: NO SIGNS OF RELENTING - IMPLICATIONS FROM ELEVATED INPUT COSTS CONTINUE TO UNFOLD
Nov. 1, 2021
Blog by Keith Good, University of Illinois
Earlier this week, Wall Street Journal writer Jinjoo Lee reported that, "High natural-gas prices today mean your electricity and heating bills will likely be expensive this winter. Next year, it could mean you will end up paying more to eat and to fill up your car.
"In Europe, where natural gas is almost six times as expensive as it was a year earlier, fertilizer companies-including Norwegian company Yara, as well as BASF and Borealis-have announced curtailments as a result of expensive gas. Fertilizer production in the region has dropped as much as 40% as a result of tight supplies, according to CME Group. Natural gas can account for up to 85% of the production cost of ammonia, a key ingredient for many fertilizers, according to estimates from the U.S. Department of Agriculture."
The Journal article noted that, "High natural-gas prices already have made nitrogen-based fertilizers more expensive, with both ammonia and urea prices in the U.S. roughly tripling compared with a year earlier, according to data from ICIS.
 |
|---|
| Schnitkey, G., N. Paulson, K. Swanson and C. Zulauf. “Management Decisions Relative to High Nitrogen Fertilizer Prices.” farmdoc daily (11):147, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 26, 2021. |
"Adding to the rally, China, one of the world's largest fertilizer exporters, is said to be imposing curbs on shipments, according to a report released last Tuesday on Bloomberg."
With respect to implications, the Journal article explained that, "If high prices persist, more farmers are likely to opt next year for planting soybeans, which require less fertilizer, according to Mark Milam, fertilizers senior editor at ICIS, who notes that 'buyer reluctance' from farmers is starting to build as a result of surging costs.
University of Illinois agricultural economist Gary Schnitkey noted this week that, "As the price of nitrogen changes, corn and soybean prices will likely adjust to maintain about an equal level of relative profitability of the two crops."
To view the complete report, click here.
|
|
|
|
|
