Veronica Nigh, senior economist at The Fertilizer Institute (TFI), shares the indexes she’s watching to gauge the direction of the global fertilizer markets. TFI represents more than 200 companies across the fertilizer industry.
While TFI does not collect pricing information from members, she watches the industry via the indexes and industry reports to discuss a short-term outlook for products as well as some things to watch in the long-term. Here are five takeaways from her recent interview on The Scoop podcast:
1. We’re coming down from the high spikes in prices—mostly.
In nitrogen, Nigh reports most products are close to their 10-year average prices.
For example, with anhydrous ammonia prices while the product pricing isn’t down to the levels of 2019/2020, it’s trending down from the recent highs in 2022/2023.
Potash prices are up 2% compared to 10 year average.
DAP prices are still a little high relative to the 10 year-average.
“The last couple of years have been tough, there has been a roller coaster for folks,” she says.
2. Production is up.
“When we look at the health of the fertilizer industry and look at in the production side production this year, it’s positive. For example, production on anhydrous is elevated this year compared to last year.”
3. Import dependency for product availability has come into focus.
“Something that we’ve learned a lot about in the past few years is related to import dependence of different products,” Nigh says. “Those products that have more production of it in the United States, we have a better idea about all of the things that might be going into the pricing and availability.”
She offers P and K as example, which have more exposure to the global markets and global availability. She cites import dependence of about 14% for phosphate; import dependence is over 90% for potash.
Anhydrous ammonia has a bit of a different recent history.
“Our import dependence has fallen for ammonia. Back in 2003 we were at 42%. For in 2023—the latest numbers available—we’re down to 7% import dependence,” she says.
4. Natural gas prices are always worth watching.
“Natural gas prices have a huge impact on nitrogen prices,” Nigh says.
While natural gas prices are coming down from their recent spikes in 2021/2022, she notes it makes her more comfortable with what’s to come for prices reaching the farm gate. But she notes, recent conflicts highlight how quickly things can change.
“The EU gets most of their natural gas from Russia. And we saw well, some pretty enormous spikes, frankly, as Russia invaded Ukraine and the market was trying to make sense of all of that. I’m gonna keep an eye on that: the Russia/Ukraine situation in the natural gas space and therefore its impact on nitrogen. And when we think about what a significant player Russia is across, N, P and K that’s something that we’re going to keep an eye on.”
5. Infrastructure is pivotal to product movement.
“Last fall, we saw a lot of limitations on barge movements on the Mississippi River because a low water levels,” Nigh says. “That certainly had an impact on corn and beans and some wheat that was traveling downriver to New Orleans. But that same waterway is trying to bring fertilizer up channel. Low water levels impact fertilizer movement as well,” she says.
With 60% of ammonia production in the southern region of the U.S., having reliable and efficient transportation to the corn is key.
“Any challenges we have in getting that product south to north is going to be a big deal. So whether it be low water levels on the Mississippi, whether it be challenges with the rail, or if there’s limitations on trucking or availability of those folks who are driving the trucks–all of those things are pinch points as far as getting product from one place to its final users on the farm.”
