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Jason Troendle, an economist from The Fertilizer Institute, speaks about fertilizer markets at the Keystone Crops and Soils Conference on Nov. 2, 2022 at the Holiday Inn in Grantville, Pa.

GRANTVILLE, Pa. — Fertilizer prices have been on the minds of farmers all over the U.S., but unforeseen circumstances makes it hard for economists to predict where the market will go.

Jason Troendle, an economist at The Fertilizer Institute, said that to have an understanding of where fertilizer prices will be in the future, you need to understand how they got to where they are now.

But there isn’t a simple answer.

“It’s really difficult for me to pick out the one reason why fertilizer markets are the way they are,” Troendle said at the Nov. 2 Keystone Crops and Soils Conference hosted by PennAg Industries and Penn State Extension at the Grantville Holiday Inn.

Overall, Troendle said the global market has seen increased fertilizer demand but decreased fertilizer supply. Both of those circumstances can drive prices up.

But a lot of factors in recent years, many of which were unexpected, have culminated in the market being where it is today.

Back in 2020, many fertilizer plants delayed maintenance due to the pandemic. These delays led to twice as many facilities as normal being shut down in 2021 for routine maintenance, Troendle said.

Additionally in 2021, weather disasters such as hurricanes and an unexpected freeze in the South caused a loss of about 3.5% of the nation’s fertilizer production.

This year, other factors have come into play, including high natural gas prices.

“Fertilizer and the energy markets are inherently linked,” Troendle said. “Natural gas is the key feedstock as well as energy source for ammonia and nitrogen production. At any given point in time it can represent about 70-90% of the production cost.”

Though natural gas prices in the U.S. have fallen from the highs over the summer, prices are still higher than they were in 2020.

Troendle is hoping the price will continue to decrease, especially since the fall weather has been relatively warm and the winter is predicted to be mild.

However, natural gas demand in Europe is another story and has a large effect on the global fertilizer market.

Natural gas prices jumped so high in Europe that many of its fertilizer plants had to shut down, and the continent needed to rely heavily on imports.

“What happens in Europe — particularly on the nitrogen side — is and will continue to impact the U.S.,” Troendle said.

Natural gas prices across the pond have started to drop, but it remains unclear when plants will be able to ramp production back up.

Another hefty factor in fertilizer markets is trade disruptions.

Sanctions on both Russia and Belarus have straitened the global market. Those two countries combine for about 40% of the global potash market, and historically made up 13% of U.S. potash imports.

Most of the U.S.’ potash imports come from Canada.

Additionally, back in 2020, China banned fertilizer exports. The country represents about 25% of the global phosphate market.

While the global fertilizer market may seem daunting, Troendle did have a few positives, one being that crop prices are OK and look like they will hold.

Additionally, natural gas prices have fallen and seem to be continuing on a slow downward trajectory.

U.S. production, imports and exports of fertilizer have remained steady.

“We seem to have fairly consistent and consistently high nitrogen balances,” Troendle said. “Phosphate balances were down a little bit. Potash balances were about historically where we’ve been.”

With the global fertilizer market being difficult to predict, Troendle encouraged farmers to mitigate risk as much as possible.

He suggested soil testing to know exactly how much fertilizer is needed. He also encouraged farmers to try to put some of next year’s crops on the books to lock in prices.

Troendle also stressed communication with certified crop advisers.

“Go talk to your CCAs,” Troendle said. “That way you can communicate. You can develop a plan. You can understand what you need. Those relationships we have in agriculture are really, really important, now more than ever.”

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