1/5/2001 Fertilizer exec: Holding off on nitrogen buys "risky"

By Jerry Carlson for Pro Farmer Editors

Taking a chance on buying anhydrous or other nitrogen late next spring -- based on hopes that natural gas prices will drop substantially -- "...is a risky approach" for a farmer, says Fred Gill, president and CEO of Saskferco Products Inc., a joint fertilizer production venture between Cargill and Saskatchewan. Their plant is in Belle Plaine, Sask., their headquarters are in Regina. He tells us, "I don't want to be alarmist, but I think the risk is real that supply could be short."

"Right now the natural gas price for February is $8.98" [per million BTUs], says Gill. "You can't make that into ammonia without significant price increases [for ammonia]."

He anticipates seeing some ammonia plants restart in February, assuming price relationships between natural gas and ammonia get somewhat more in line.

"In general, I'd advise a farmer who can put his hands on ammonia or other nitrogen product to simply hold his nose at the price and buy it," says Gill.

Even if natural gas prices ease with industrial shutdowns, warmer weather and reduced heating use in March, it would take 30 to 60 days for ammonia plants to get back into production and move products to retail positions. That might be in time to get some ammonia side-dressed.

But Gill reminded us that the ammonia fertilizer industry is running at a historically low percent of capacity. When we mentioned that other industry watchers see a 10% shortfall in nitrogen supplies this season, his comeback was: "It could be a lot shorter than that."

Gill emphasizes that Saskferco is continuing to operate at full capacity to meet customer needs, and has no plans to curtail production.

http://www.agweb.com/news_printer.asp?file=AgNewsArticle_2001151139_1&newscat=GN&at=

-- Martin Thompson (mthom1927@aol.com), January 05, 2001

Answers

Sat, January 6, 2001

Farm fertilizer prices skyrocketing due to spiraling cost of natural gas Larry Gittings, Times Record News

Skyrocketing farm fertilizer prices are expected to come down in the fall when fertilizer manufacturers are no longer competing with cold homeowners for high-priced, scarce natural gas. However, the only break hard-pressed North Texas and Southern Oklahoma farmers comes from the weather, which prevented farmers from sowing as much acreage to winter wheat as normal and reduced fertilizer use.

Last summer's drought kept most farmers from fertilizing as they would normally have in fear of not having a crop and when it did began raining, farmers couldn't get in their fields to fertilize or plant before the Dec. 15 deadline. Couple with that with years of low wheat prices that has forced farmers to cutback on the amount of fertilizer they have been using in recent years as a cost-cutting measure. The group to be hit the hardest later this year will be the region's cotton farmers, who will be needing fertilizer in May and June. Locally, prices for fertilizer are close to doubling in the past year. Regional Editor Larry Gittings can be reached at (940) 763-7554 or (800) 627-1646, Ext. 554, or with e-mail at gittingsl@wtr.com.

http://www.trnonline.com/stories/01062001/regional_news/26735.shtml

-- Martin Thompson (mthom1927@aol.com), January 07, 2001.