The cost of fertilizers has been going down for over a year, and this trend continued in August 2023. Specifically, nitrogen-based fertilizers like urea and liquid nitrogen have usually been priced 35% to 40% higher than anhydrous ammonia, another common type of fertilizer.
However, things changed in 2022 because of the Russia-Ukraine conflict, causing disruptions in the global fertilizer market. The extra cost of liquid nitrogen compared to anhydrous ammonia went back to normal levels, while the difference between urea and anhydrous prices kept getting smaller.
This happened because there's more fertilizer being produced globally and not as much demand, especially in Europe. In Europe, laws have been made to improve air quality, and this might reduce the use of urea.
The big drop in fertilizer prices overall, and the better pricing of urea in particular, could influence how farmers choose their nitrogen-based fertilizers for the 2024 crop season.
The price of fertilizers in Illinois went down in August 2023, according to the U.S. Department of Agriculture's report. For example, the cost of anhydrous ammonia dropped by 33% to $586 per ton. Liquid nitrogen became 26% cheaper at $397 per ton, and urea went down 5% to $473 per ton. These price changes continue a trend that started more than a year ago from the highest prices in mid-2022.
Both liquid nitrogen and urea usually cost more per pound of nitrogen compared to anhydrous ammonia because they need more steps to make. The extra cost of liquid nitrogen compared to anhydrous has stayed the same since 2020.
However, the extra cost of urea went down a lot in 2022 and has stayed low in 2023. The prices of anhydrous and urea have been quite close this year.
These price changes are because of things like the Russia-Ukraine conflict and also plans to make more urea and lower demand. India, which makes a lot of urea, wants to produce even more by 2025 and not rely on imports.
In 2022, prices went up a lot, and this made many people not want to buy fertilizers, especially in Europe. Europe gets a lot of its fertilizers from places like Russia and Belarus, but these imports were affected by energy price increases and other issues.
In Europe, they also made laws to lower pollution, which might mean using fewer fertilizers like urea. This makes it unclear how much urea will be needed in the future.
The fertilizer prices going down is good news for farmers' income, and it might affect their decisions for the 2024 crop year. If urea keeps being cheaper than anhydrous ammonia, it could be a better choice for farmers next year.
Photo Credit: gettyimages-darcymaulsby
Categories: Illinois, Crops