The Nitrogen Fertilizer Perfect Storm

While many are making much of the (planned) historically corn acreage to be planted this year, and the connection to ethanol, there is an underlying storm that is at least as interesting, if not more. It has to do with nitrogen fertilizers, where costs have more than doubled in the last 30 months, putting them now at $500/ton.

Why are nitrogen fertilizers costs up so much? Demand is part of the equation, but there is a supply issue as well. Keep in mind that the price of nitrogen is tied directly to the price of natural gas, with 1 ton of fertilizer requiring about 33,500 cubic feet of natural gas. The upshot is that with rapidly increasing demand, plus increased components prices, we have a pricing perfect storm for nitrogen fertilizers. Good for Potash Corp., and others.

Why nitrogen fertilizers require natural gas is a question with a longer answer, so have a look  here for more.

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Comments

  1. Yaacov says:

    If that’s the case look for lawn fertilizer surcharges to pop up this summer in addition to a fuel surcharge. Most lawns get the bulk of their nitrogen applications in the fall.
    Is your landscape jacking up his prices this year?