Fertilizer prices take wild ride as spring planting cranks up

Just in time for spring planting, the price of ammonia fertilizer went on a wild roller coaster ride to start this week. Monday, the price of ammonia rose 50 percent from $650 to $990 a ton. The rise was an unprecedented single day spike in prices, said Fred Morschek of McGregor Co.

Tuesday, the price dropped 20 percent.

Though application rates vary based on crops and soil profile, a typical application rate of ammonia on spring crops is about 100 pounds per acre.

“Ammonia had a bit of an - adjustment,” said Ron Wachter of Nu-Chem. “It was very shocking. It came clear out of the blue.”

Alberta-based Agrium is the primary manufacturer of nitrogen-based products used as fertilizer in the northwest. Wachter said there are only two manufacturers in North America, Agrium and CF Industries of Illinois.

The price posted by CF rose to near $800, said Wachter, so Agrium reacted with Monday’s massive increase. When CF did not follow Tuesday, Agrium backed down.

“Yeah, the sky fell for a day,” said Wachter. “But nobody bought anything at that price.”

“It’s pretty well regulated by the market,” agreed Morschek. “Ultimately, if they go too far, the market will fix the price.”

With enough storage, local fertilizer firms had enough stock on hand that they did not need to buy nitrogen products at Monday’s high prices.

Nevertheless, the price should settle much higher than it was Monday morning for the near future.

The all-time high was set in 2008, when ammonia prices rose to $1,250 a ton.

The rise is prompted by an unanticipated demand for ammonia.

Record canola plantings in Canada and record corn plantings in the midwest prompted heavy demand for fertilizer. It was much heavier than what was anticipated last winter, said Morschek. Those crops are also being planted earlier than usual because of a dry, warm spring.

Wachter said other fertilizer products like urea and uran solution 32 rose earlier in the year. That prompted farmers throughout North America to turn to the cheaper ammonia.

A fire Sunday also wiped out weeks of production of ammonia at Dakota Gas, a large supplier of fertilizer for northern states, said Morschek.

Both agreed the price will come back down.

“Wheat goes to $20, nobody complains,” said Wachter. “This is the free market. It works good for us there. It works the other side here.”