Farmers postpone purchases due to shortage of nitrogen fertilizer

Amid the shortfall of nitrogen fertilizer worldwide, farming communities in North America are opting to defer purchases, increasing the chance of a springtime surge in demand for fertilizers and seed before the planting of crops.

Nitrogen fertilizer is used to increase the growth of crops, such as corn, wheat, and canola. The higher price of fertilizers may lead to bread and meat products becoming costlier for consumers, according to economists.

The United Nations food agency stated that the cost of food worldwide has reached their highest price in a decade during the month of October, accompanied by spikes in the pricing of plant-derived oils and wheat.

The production of fertilizers in the United States has been hampered by severe winter storms in Texas during February, followed by Hurricane Ida in August. The price of natural gas, which is chiefly used in nitrogen production, spiked in Europe due to soaring demand and shortfalls in supply. The November price of urea fertilizer exceeded $1,000 for the first time, according to BMO Capital Markets.

In the United States, nitrogen fertilizer stocks are expected to be adequate during the upcoming winter, according to Daren Coppock, chief executive officer at Applied Research Associates. The amount of work to be done by farmers in the spring is lower because of the pre-winter application of these crop nutrients.

With spiraling prices, farmers are postponing their purchases, raising the likelihood that there will be very high demand for stocks during the planting season, Coppock stated.

Some $53 billion worth of nitrogen fertilizers were sold last year, with prices being 80 percent higher than in 2021, according to Argus Media.

The Mid-Kansas Cooperative Association would sell fertilizers to farming communities against payments made in advance, to be delivered several months later.

As pricing climbed, the Mid-Kansas Cooperative Association curtailed its sales, for which prepayments were completed, as a precautionary measure.

You just do not know what the price is going to be. According to Troy Walker, the association's retail fertilizer director, it has put a lot of retailers in a tough spot.