Wheat producers are paying up to three times more than in 2020 for the fertilizers they rely on to improve the growth and yield of their plants.
As of December, producers were paying between $ 220 and $ 275 a tonne for nitrogen applications that now cost between $ 635 and $ 700 a tonne, said Mike Schulte, executive director of the Oklahoma Wheat Commission.
âI hope we will see an increase in the prices of raw materials. Producers will need it for these next crops, âsaid Schulte.
Wheat spot prices at close of business Thursday ranged from $ 7.81 to $ 8.32 a bushel at grain elevators in Oklahoma. At that time, last year, prices ranged from $ 5.03 to $ 5.27, he said.
Currently, the widely used liquid urea ammonium nitrate, or UAN, costs $ 1 a pound, said Trent Milacek, an agricultural economics specialist in OSU Extension’s northwest region. It takes 2 pounds of nitrogen for every bushel of wheat thrown.
âThe cost of nitrogen alone for a bushel is $ 2,â Milacek said. âAt best, it stays the same. No one in the industry sees things getting better anytime soon.
Operators considering an application in the spring may find it difficult to secure a contract for UAN for delivery from December to February, he said.
Access to fertilizers is affected by the same supply chain constraints that every industry faces, as well as global low stocks of natural gas – a key ingredient in the process used to make nitrogen-based fertilizers.
Labor shortages have disrupted both the unloading of fertilizer on ships from China and production at domestic factories, Schulte said.
Chemical & Engineering News reports that major U.S. fertilizer makers, in profit calls in early November, said factors contributing to the recent price spike include the cost of natural gas, fertilizer plant closures and reducing China’s exports to protect its own supply.
The World Bank’s Nov. 15 blog reported that China had announced that it was suspending its fertilizer exports until June due to food security concerns. Chinese exports of DAP (diammonium phosphate) and urea represent approximately one third and one tenth of world trade, respectively. Adding to supply problems, Russia recently announced restrictions on exports of nitrogen and phosphate fertilizers for six months, effective December 1, according to the blog.
âAccessibility could still be an issue this spring,â Schulte said. âNitrogen management decisions weigh on the minds of growers.
Reducing nitrogen is not a good long-term strategy, he said. âYields are very likely to drag and there will be less harvest. “
Milacek makes this argument when growers say they can’t afford to fertilize. âIt’s a very stupid long-term statement,â he said.
âThis is a great opportunity for good managers to face issues head-on and be proactive in trying to manage that risk,â he said.
Schulte said wheat exports were also affected. China is buying 35 to 40 percent less US wheat, and Oklahoma’s biggest wheat buyers – Mexico and countries in South America – are also buying less due to supply chain issues and workforce linked to the pandemic, he said.