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Sep. 29, 2022 By Gary Schnitkey, Nick Paulson, Krista Swanson, and Jim Baltz. Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf. Department of Agricultural, Environmental and Development Economics, Ohio State University While fertilizer prices have declined since spring, fertilizer prices remain high, and fertilizer costs are significantly higher than a year ago. Therefore, reducing rates where practicable seems prudent. Some fields will have soil test levels above those that will cause a yield response from phosphorus and potassium applications. Significantly reducing or eliminating applications in these fields is economically prudent. Moreover, nitrogen applications above university recommendations can substantially reduce returns. Changes in nitrogen prices from now to spring likely will be influenced by changes in corn and natural gas prices. Recent Prices Retail fertilizer prices averaged across Illinois are regularly reported in the Illinois Production Cost Report, a publication of the USDA's Agricultural Marketing Service. Fertilizer prices remain at high levels going into the fall of 2022. Anhydrous ammonia prices continue to surpass all-time highs reached during the 2008 financial crisis. In the fall of 2008, anhydrous ammonia reached a high in Illinois of $1,161 per ton (see Figure 1). Anhydrous ammonia prices have exceeded the 2008 previous record since October 2021. Anhydrous ammonia prices were over $1,600 per ton through April 2022, falling to $1,153 per ton on August 25, 2022. Then, anhydrous ammonia again increased, reaching $1,318 per ton on September 22. Diammonium phosphate (DAP) and potash fertilizers also remain at high levels. DAP was over $1,000 per ton in June 2022. On September 22, DAP prices were reported at $947 per ton. Potash prices have remained relatively stable at high levels, with a price of $857 per ton reported on September 22, 2022. While ammonia and DAP prices have declined since spring, current fertilizer prices are higher than last year and will result in higher fertilizer costs than last year. Table 1 shows fertilizer costs computed using prices from one year ago on September 23, 2021, and current-year prices on September 22, 2021. As can be seen, anhydrous ammonia prices were $788 per ton last year and are now $1,318 per ton. As a result, anhydrous ammonia costs for corn increased from $67 per acre using 2021 prices to $1132 per acre using 2022 prices. Table 1 gives fertilizer costs for corn and soybeans produced on farmland with expected yields of 220 bushels per acre for corn and 68 bushels per acre for soybeans. The Corn Nitrogen Rate Calculator was used to determine corn's Maximum Return to Nitrogen (MRTN) rates. After accounting for the nitrogen in DAP, the MRTN rates resulted in applications of 170 pounds of anhydrous ammonia. Phosphate and potash rates are based on maintenance levels. Fertilizer costs for corn were $175 per acre using September 23, 2021 price and increased by $72 per acre to $247 per acre using September 22, 2022, prices. Soybean costs increased from $85 per acre to $110 per acre, an increase of $25 per ton. To continue reading article, Click Here Tweet |
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