Attendance at the 87th annual Southwestern Fertilizer Conference continues to break records, with some 1,590 attendees recorded in the meeting held July 14-17 in San Antonio. Conference organizer Pat Miller told Green Markets last week that attendance has gone up each year in the past ten except one – in 2006 – and it quickly rebounded thereafter.
Industry players appeared bullish, despite the worst drought in the U.S. since 1988. Most were enjoying the business from the large acreage planted this year and looking forward to large crops in 2013. “It was fairly positive, considering how bad the drought is,” said one source, talking about the mood at the conference. “There was lots of talk, but not that much went down regarding sales.”
Despite the drought, many were hopeful farmers will have money from higher commodity prices and crop insurance and will be ready to again plant fencerow-to-fencerow. Some said the drought may be worse than USDA’s recent crop yield estimate of 146 bushels per acre. One executive told Green Markets that 130 bushels per acre was now being commonly discussed. Other concerns were low water levels on the river system that were already starting to impede barge traffic, as well as scheduled lock closures on the Arkansas River.
Those with nitrogen appeared to be the most optimistic, and the common mantra that farmers always apply nitrogen was the theme. Indeed, NOLA urea and UAN prices did go up last week. The jury does appear to still be out on phosphates and potash, though sellers of both remained optimistic.
“They will buy the nitrogen, but will soil test for the others,” said one source.
“Bottom line, if you’re a farmer and you’ve got a drought situation with hot temperatures, and you truly don’t know what it’s going to yield, will you be buying any equipment or fertilizer?,” said another, who was more cautious. “I don’t think we’ll know a whole lot until the farmer gets into the field.”
Tying into this market commentary was conference speaker Glen Buckley, chief economist, NPK Fertilizer Advisory Service Inc. He said as the drought continues, the likelihood of USDA’s 146 bushels per acre on 88.9 million acres harvested becomes more remote. He noted that in the 1988 drought, the corn yield was 124 bushels per acre on 81 million acres harvested.
Regardless, Buckley is projecting 95 million acres of corn for 2013. He said there has to be normal moisture for a good fall season, particularly for ammonia. As of July 19, there were major weather reports that the drought could extend at least until November.
Assuming good weather, Buckley sees ammonia supplies as balanced-to-tight, with strong movement and limited supplies. He noted that the product in the Cornbelt held its ground this season, and that there is really no correlation between the Cornbelt price and Tampa.
As for urea, he said if river woes continue, NOLA could be a parking lot for urea in the next 30-60 days. Buckley said summer turnarounds are needed to bring urea back in balance. He noted that the international market is under pressure, and that an incredible amount of urea is headed this way as the U.S. market remains higher than the international market.
As for UAN, he said the market looks long, and that supply is not an issue.
He sees the phosphate market going sideways to slightly declining, and said the U.S. will likely see more imports from Russia and Morocco. While demand looks good, he expects supply will exceed demand.
Buckley called potash massively long. He said there will have to be more curtailments to balance the market. He expects 2012 world demand to drop to 52 million mt, with no upside from major buyers China and India. Potash producers in attendance were more upbeat, pointin