Several analysts interviewed for this article estimate about 92 million corn acres will be planted this spring, representing a relatively strong, but not record demand for N relative to recent years.

Longer term trends in N application, such as more sidedressing N and N stabilizers even out the spring demand spike. Add to that the move from anhydrous to liquid N, and soybeans being more profitable this coming year, should all calm N prices, in addition to lower natural gas prices, Schnitkey adds.

Consider also these market forces:

  • A related graph gallery shows a roughly 300% increase in Marcellus-formation natural-gas production from 2009-10 to 2012-’13. Falling prices for N’s main feedstock has to be good news for you.
  • There are 17 N-manufacturing expansion projects underway in North America. Weaker corn prices and high construction costs mean that perhaps only half may actually be built, according to CF Industries’ Doug Hoadley’s N outlook at a recent Fertilizer Institute (TFI) outlook conference. Hoadley, CF’s director of agribusiness analysis, bases his stable-to slightly higher N-application rates on 92 million acres of corn and 56.5 million acres of 2014 wheat planting intentions.
  • Although China is the fastest growing global N producer, its N is made from coal, a less competitive feedstock, analysts say. The largest N-producing countries are China, India, the U.S. and Russia. The U.S. can produce 12.5 million material tons of ammonia used as a fertilizer, as a building block for other N products and for industrial uses, according to TFI data.
  • More domestic N simplifies your transportation and security of supply.

Price decreases this large happen rarely

While 2014 price declines are large, further downward pressure may exist on fertilizer prices, according to the University of Illinois’ farmdoc website. USDA’s Agricultural Marketing Service reported 27% price drops for Illinois price averages ($651 per ton) (reported Jan. 23, 2014).

Price decreases this large happen rarely.  Since 1975, anhydrous ammonia prices decreased more in only three years:  -33% in 1976, -38% in 2002, and -34% in 2010. Larger DAP price decreases only occurred in two years:  -33% in 1976 and -27% in 2010.  Since 1975, a larger decrease for potash price only occurred in one year: -23% in 2010. 

While 2014 price declines are large, further downward pressure may exist on fertilizer prices, Schnitkey writes on farmdoc (http://bit.ly/1dvfVcP).