U.S. crop prices hit by Hurricane Ida

Reuters - Troy Walker's phone will not stop ringing at his Kansas farm cooperative, with growers needing fertilizer for their wheat fields in the coming months.

Caleb Ragland said of his local farm supplier that shelves in Kentucky are often bare of weed killer glyphosate and other crop chemicals. Bayer's glyphosate manufacturing plant in Louisiana is closed after Hurricane Ida slammed the Gulf Coast in late August, further complicating logistical and supply chain problems that had already tightened global supplies of fertilizers and chemicals.

Ida is like a heavyweight boxer going 15 rounds and at the farmer threw a hard uppercut, says Ragland, a ninth generation corn and soybean farmer in Magnolia, Kentucky. Things were bad. Ida made things worse. Ida disrupted soybean shipments from the Gulf Coast, which accounts for about 60% of U.S. exports at a time global crop supplies are tight and demand from China is strong.

Now, the ripple effects of the hurricane are hampering production and movement of some fertilizers and crop chemicals ahead of U.S. harvest. This is straining an agricultural and food supply chain already battered by trade and logistics delays during the pandemic.

Rising input prices threaten the incomes of farmers that had banked on booming profits this year, as crop prices soared to the highest in nearly a decade after years of stagnating around break-even levels. Ragland and other farmers have been rethinking what they will plant in the spring; crops with less fertilizer look more attractive.

At current prices for nitrogen, it makes me take a hard look at my corn acres, Ragland said. So it makes me think that we can grow soybeans on some of the acres. Before Hurricane Ida, the U.S. Agriculture Department had estimated that farmers would face a 2.2% increase in corn input costs for every acre planted in 2022, according to the most recent data, as chemicals and fertilizers followed higher crop prices and supply chain disruptions.

Global supplies were thin of the raw ingredients needed to make farm herbicides including glufosinate, atrazine and glyphosate, partly due to pandemic-related labor and shipping problems, said Marc-Andre Fortin, director of North American crop protection with Farmers Business Network, an online marketplace for farmers.

Imports of herbicide containers moved into the Port of New Orleans were down 71% from same period a year earlier and herbicide container imports were down 1.2%, according to Panjiva, the supplier chain research unit of S&P Global Market Intelligence. Potash imports dropped 14.8% in New Orleans.

Then Ida shuttered Bayer's glyphosate plant in Luling, Louisiana. The plant helps provide all active ingredient for Bayer's Roundup branded ag herbicides in the United States, the company told Reuters.

The Bayer plant has been closed since Aug. 28. The company, which hopes to restore power within weeks, said it is also working to repair wind damage and run system tests.

Global glyphosate supplies were already congested as flooding, COVID - 19 outbreaks and localized ports have snarled production and exports in China for months, said Allan W. Gray, executive director of the Purdue University Center for Food and Agricultural Business.

As a result, chemicals manufacturers are rationing supplies to farmers and others, Gray said.

Walker and the staff at Kansas Farm cooperative MKC have not been able to get price quotes from fertilizer suppliers for early 2022. Suppliers do not know if they will have anything to sell, he said - so Walker turned some customers off.

Such problems have plagued retailers for months. China, the world's top exporter of phosphate, temporarily halted urea and diammonium phosphate fertilizer exports this summer to feed domestic demand as energy costs and corn prices rose.

More recently, fertilizer producer CF Industries Holdings Inc halted operations at two United Kingdom manufacturing complexes, citing high costs for natural gas feedstock, a key raw material used in nitrogen fertilizers.

The largest potash producer Nutrien Ltd is sold through at least the third quarter in Canada, and global stocks for potash are tight for the rest of the year, said Ken Seitz, executive vice president of potash at Nutrien Ltd.

Ida tightened fertilizer supplies further when CF Industries and Incitec Pivot Ltd closed plants due to the hurricane and declared force majeure for customers.

As the supply chain spiked, prices spiked. Prior to the storm, a New Orleans barge of urea set to ship in September to destinations across the U.S. or Canada traded at $450 a ton, said Josh Linville, director of fertilizer at StoneX Group Inc. After, the price rose to $552 a ton.

In the fertilizer world, anything that will go wrong will go wrong, Linville said. Wheat farmer Keeff Felty, 54, said the situation is spiraling. He is studying soil samples to see where he can cut back on fertilizer next season, and paid a company to haul some in-state after local suppliers could not fill his order.

The price went up from Monday to Wednesday, said Felty, and by that night they were out.