Sunny Phoenix offered a welcome respite from winter weather for some 658 industry representatives at the 2011 Fertilizer Marketing Business Meeting. The Fertilizer Institute (TFI) reported that the event, held Feb. 6-9 at the Westin Kierland Resort in Scottsdale, drew the largest crowd in at least six years.
Registrants used the venue to network with industry contacts and try to get some idea of what 2011 fertilizer demand and prices will be. “It’s always good to get together and at least swap lies,” joked one contact. Another source said his impression based on market chatter at the conference is that fertilizer prices will remain on “cruise control” at least until the start of the spring planting season.
Others, however, said they expect ammonia and urea prices to inch up as the season approaches, though “how big that inch turns out to be” is the question, said one ammonia contact. Others described the urea pricing swings of the last two weeks simply as a “momentary stumble before the market got back on its feet.”
Richard Pottorf, chief economist at Doane Advisory Services, gave conference-goers some 2011 crop projections to consider, noting at the outset of his presentation that this is “an exciting time for all of us in the industry.” Pottorf contrasted the current bullish crop prices with those of one year ago, attributing the 2010 run-up to a significant draw-down in stocks fueled in part by weather-related growing challenges around the world.
The corn market began to take off in the Fall of 2010 when production figures indicated a drop of almost a billion bushels from earlier projections, Pottorf said. Soybeans are also extremely tight, and the record low stocks-to-use ratios for both crops have created a “very bullish situation for 2011,” he said.
With corn yields averaging about 162 bushels per acre and demand for feed, fuel, and food pushing 13.45 billion bushels, Pottorf said U.S. corn growers will need to harvest 83 million acres, or about 90.5 million planted acres, in 2011 just to hold stocks steady. Doane’s forecast is for 91 million acres of corn in 2011, with high prices continuing into 2012.
As for soybeans in 2011, with demand near 3.37 billion bushels and average yields of about 43.7 bushels per acre, U.S. growers will need to harvest 77.2 million acres, or about 78.3 million planted acres, simply to hold stocks steady. Pottorf said demand from China for soybeans is extremely strong, jumping 17.5 million mt in just two years.
Noting bullish prices for wheat and cotton as well (cotton having “gone off the charts,” reaching the highest per pound pricing levels since the Civil War), Pottorf said all factors translate to good cash flow for farmers. “2010 was a near-record year for net cash farm income, and 2011 should be better,” he said.
With crop prices up and profits looking positive, Pottorf said “farmers have incentive to invest in their high value crops,” but “it is going to be a struggle to get all the acres we’ll need.” Another uncertainty, Pottorf noted, is whether the current La Nina weather pattern will continue to fuel drought conditions in the southern U.S. and in other locations internationally during 2011.
Conference attendees were also treated to a friendly debate between political speakers and USA Today columnists Cal Thomas and Bob Beckel. In the conference’s keynote address, the two stressed the need for “common ground” between conservatives and liberals in Washington D.C., but drew laughs from the crowd with their acerbic exchanges that contrasted Beckel’s liberalism with Thomas’ conservative point of view.
“Washington is politically segregated almost as much as it used to be racially segregated,” Thomas said at the outset. “No one is reaching across the aisle.”
Beckel, scanning the fertilizer industry audience at the start of his presentation, joked that the “expectations for a liberal speaker here are so low.” He said his political ideology is driven by the “huge disparity” between those who have money and those who don’t in the U.S., arguing that every child deserves to be housed and have medical care and an education. “It is not a level playing ground,” he said. “The rich get richer and the poor get poorer.”
Thomas countered by saying the real problem in American culture is the family, and “government can’t fix that.” The choreographed exchanges between the two, who have coauthored a book called Common Ground: How to Stop the Partisan War That Is Destroying America, grew more barbed from that point on.
Thomas said “Obama is moving to the center faster than Bill Clinton chased interns,” adding that he believes the health care law “will be repealed, if not by Congress then by the courts.”
Beckel, who also appears frequently on Fox News as a liberal commentator, said the 2010 election “was not a mandate for Republicans at all,” and gave President Obama three-to-one odds to win reelection in 2012, citing the president’s ability to “rise to the occasion almost every time.” He referred to Tea Party activists as “jerks” before conceding “their ability to impact elections.”
Sizing up the potential Republican candidates in 2012, Beckel expressed tongue-in-cheek enthusiasm for a Sarah Palin/Rep. Michele Bachman (R-Minn.) ticket, saying the two “couldn’t win Alaska.”
Both agreed that we will, in Thomas’ words, get “government by regulation” for the next two years. Beckel offered constructive criticism to a fertilizer industry crowd concerned about EPA’s regulatory agenda. “You do need to be a little clearer on exactly what it is you do, and what fertilizer is and does,” he said.
The two also agreed on term limits. Thomas said the nation’s founders “never intended public service to be a full-time career,” noting that term limits are also the answer to overregulation. “I couldn’t agree more on term limits,” added Beckel. “Those politicians who have been around for 30 years are there because they know how to game the system.”
The presentation ended with conciliation and an on-stage hug between the two, a gesture that Beckel also extended to a fertilizer industry representative who had playfully heckled him during the speech. “Bob is my friend,” said Thomas. “He is not on the ‘other side.’ ”
“Ideologues don’t make it in America,” Beckel added. “Not a single thing is unworkable if you sit down in good faith.”