2014 Southeast Hay Convention
Fertilization Outlook for Hay Producers
Fertilization Outlook for
Hay Producers
Over the next few minutes…
•  Projected Production Costs
•  The False Economy of Shortcuts
•  Fertilizer Value of Different
Forage Crops
•  Fertilizer Industry Trends
-  Supply/Demand
-  Changes in Capacity
-  Imports and Consolidation
-  Price stability/decline?
Dr. Dennis Hancock
Extension Forage Specialist
Crop and Soil Sciences – UGA
Bermudagrass Hay Production – 2014
Breakdown of Projected Costs per Acre
$16 (g)
(a)
(b)
$140
(c)
(f)
(d)
$262
$12
(f)
(g)
(e)
$36
(e)
(d)
(a)
(c)
$70
(b)
$87
Fertilizer
Fuel and Maintenance
Pesticides
Interest on Var. Costs
Labor
Fixed & Mgmt Costs
Lime
$652/acre
or
$109/ton
The False Economy of Shortcuts
Cost of Production
Yield
(t/ac)
Forage Cost ($/lb) =
$522
$587
$652
$717
$782
70%
80%
90%
100%
110%
120%
----------------------------- $/ton of DM -----------------------------
Total Cost ($/Acre)
Forage Yield (lbs/Acre)
Dr. Dennis Hancock
Extension Forage Agronomist
$456
8
7
6
5
4
3
1
$57
$65
$76
$91
$114
$152
$65
$75
$87
$104
$130
$174
$73
$84
$98
$117
$147
$196
$82
$93
$109
$130
$163
$217
$90
$102
$120
$143
$179
$239
$98
$112
$130
$156
$196
$261
2014 Southeast Hay Convention
Fertilization Outlook for Hay Producers
Annual Nutrient Removal by the
Primary Hay Crops in the South
Soil Test and Follow Fertility
Recommendations
Alfalfa Bermudagrass Orchardgrass Perennial Peanut Tall Fescue Nutrients Removed (lbs of Nutrient/Acre/Year) 300 250 200 150 100 50 Sample hayfields every year and
1/3 of your pastures each year.
0 Nitrogen Phosphate Potash Calcium Mag Adapted from Southern Forages, 2007 and Myer et al, 2010.
Fertilizer Prices
0.80
Urea 45-46% nitrogen
Price
($/lb of N, P2O5, or K2O)
Diammonium phosphate (18-46-0), figured for P value only
0.60
Potassium chloride (60%)
0.40
0.20
19
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
20 5
0
20 6
0
20 7
0
20 8
0
20 9
1
20 0
1
20 1
12
20
1
20 3
14
0.00
Source: USDA-ERS, Jan. 2014 with industry forecasts
Fertilizer Prices: A New Plateau?
0.80
$90.00
2004
$80.00
2014
Urea 45-46% nitrogen
Diammonium phosphate (18-46-0), figured for P value only
($/lb of N, P2O5, or K2O)
$70.00
Price
$60.00
$50.00
$40.00
0.60
Potassium chloride (60%)
0.40
0.20
$30.00
$20.00
0.00
$10.00
$0.00
19
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
20 5
0
20 6
0
20 7
0
20 8
0
20 9
1
20 0
1
20 1
12
20
1
20 3
14
Value of Fertilizer (N, P2O5, or K2O)
per Ton of DM
Tracking Fertilizer Value in Your Hay
has Also Never Been More Important
Alfalfa
Bermudagrass Corn silage
Fescue
Dr. Dennis Hancock
Extension Forage Agronomist
Orchardgrass
Peanut
Source: USDA-ERS, Jan. 2014 with industry forecasts
2
2014 Southeast Hay Convention
Fertilization Outlook for Hay Producers
(% of Total NPK Demand)
World N Supply/Demand
Balance
Total NPK Use in the U.S.
Demand is Driven by Corn
180.0
Demand
170.0
Capacity
+12.6%
160.0
Corn
Wheat
Soybean
140.0
130.0
110.0
Cotton
100.0
High Value Crops
90.0
Other
4,000,000
6,000,000
4,000,000
3,500,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
1960
1970
1980
1990
2000
-
2010
1960
Source: USDA Economic Research Service (http://www.ers.usda.gov/Data/FertilizerUse/).
Import
Million tons of Nitrogen
1980
1990
Domestic
12%
7%
6%
35%
Middle East
Canada
50.8%
China
10
11%
8
Egypt
6
Trinidad
4
Other
2
2003
2004
2005
2006
2007
2008
2009
2010
28%
2011
Source: Glen Buckley, NPK Fertilizer & Advisory Service, Nov. 2011.
Adapted from USDA Economic Research Service (http://www.ers.usda.gov/Data/FertilizerUse/).
Dr. Dennis Hancock
Extension Forage Agronomist
2010
Urea Imports by Country
16
0
2002
2000
(% of Total Urea Imports)
18
27.2%
1970
Adapted from USDA Economic Research Service (http://www.ers.usda.gov/Data/FertilizerUse/).
U.S. N Use is Dependent
Upon Imports
20
12
16
3,000,000
2,000,000
14
Anh. Amm.
Amm. Nit.
N Solns.
Urea
4,500,000
Tons of Actual N
Tons of Product
Actual N Applied
5,000,000
8,000,000
22
20
N Fertilizer Products Sold in the U.S.
Anh. Amm.
Amm. Nit.
N Solns
Urea
10,000,000
15
Source: UN FAO, 2012. Current world fertilizer trends and outlook to 2016.
Actual Product
12,000,000
20
Source: Glen Buckley, NPK Fertilizer & Advisory Service,
Nov. 2011.
N Fertilizer Products Sold in the U.S.
14,000,000
20
12
20
11%
5%
14
80.0
3%
20
12%
+5.5%
120.0
13
47%
150.0
Million tons
22%
3
2014 Southeast Hay Convention
Fertilization Outlook for Hay Producers
U.S. UAN 32% Prices
Urea Prices
(FOB Gulf Barge - $/ton)
(Black Sea Urea Prices)
High End
High End
Expected
Expected
Low End
Low End
Source: Bryce Knorr, FarmFutures.com (http://farmfutures.com/story-weekly-fertilizer-review-0-30765)
Source: Bryce Knorr, FarmFutures.com (http://farmfutures.com/story-weekly-fertilizer-review-0-30765)
U.S. Petroleum and Other
Liquid Fuels Supply
U.S. Energy Production by Fuel
Adapted from U.S. Energy Information Administration's Annual Energy Outlook 2014
Adapted from U.S. Energy Information Administration's Annual Energy Outlook 2014
U.S. Natural Gas Imports and
Exports (trillion cubic feet)
U.S. Electricity Generation
(Billion kilowatthours)
Adapted from U.S. Energy Information Administration's Annual Energy Outlook 2014
Dr. Dennis Hancock
Extension Forage Agronomist
Adapted from U.S. Energy Information Administration's Annual Energy Outlook 2014
4
2014 Southeast Hay Convention
Fertilization Outlook for Hay Producers
Phosphorus Supply
U.S. P Use and Exports
•  Phosphorus over short term appears stable
14
-  500%+ increase in imports in 2010 & 11.
-  Morocco has 40% of world’s supply of P
•  Long term supply is questioned.
-  US has 19% of world’s supply of P
-  65% of that comes from one area (Tampa)
-  Cons. estimates are that this resource will last less
than 30 yrs.
Export
Domestic
12
Million tons of Nitrogen
•  Price of MAP/DAP may be suppressed by inc.
imports from Morocco & Russia.
10
8
42.4%
31.2%
6
4
2
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Adapted from USDA Economic Research Service (http://www.ers.usda.gov/Data/FertilizerUse/).
U.S. DAP Price Forecast
World P Supply/Demand
Balance
55.0
Demand
54.0
Capacity
(FOB Tampa - $/metric ton)
+12.5%
High End
Million tons
53.0
52.0
Expected
51.0
Low End
50.0
49.0
48.0
47.0
+8.7%
46.0
16
20
15
20
14
20
13
20
20
12
45.0
Source: UN FAO, 2012. Current world fertilizer trends and outlook to 2016.
Source: Bryce Knorr, FarmFutures.com (http://farmfutures.com/story-weekly-fertilizer-review-0-30765)
World K Supply/Demand
Balance
Demand
Capacity
U.S. K Use and Imports
9
+31.4%
Million tons
55.0
50.0
45.0
40.0
35.0
+15.8%
7
6
5
4
3
85.4%
78.0%
2
0
2002
20
16
20
15
20
14
20
13
12
20
Domestic
1
30.0
Source: UN FAO, 2012. Current world fertilizer trends and outlook to 2016.
Dr. Dennis Hancock
Extension Forage Agronomist
Import
8
Million tons of Nitrogen
60.0
2003
2004
2005
2006
2007
2008
2009
2010
Adapted from USDA Economic Research Service (http://www.ers.usda.gov/Data/FertilizerUse/).
5
2011
2014 Southeast Hay Convention
Fertilization Outlook for Hay Producers
(Million Metric Tons)
World Potash Capacity by
Country/Company
Industry has become
Potash Supply by Country/Region
1,485
1,117
Volume
3,750
18,455
Canada
East Europe
Western Europe
China
Middle East
Latin America
USA
Other
5,548
5,797
5,895
16,918
PCS
Mosaic
Agrium
6364
6545
1240
13%
13%
3%
}
Russia
Uralkali
Silvinit
3452
3763
7%
8%
} combined
Belarus
Germany
Israel
Jordan
Belaruskali
Kali & Salz
ICL Fertilizers
Arab Potash
Major Producers
5465
4250
3600
1452
36,131
13,066
11%
9%
7%
3%
73%
27%
Others
U.S. Potash Price Forecast
highly consolidated.
Canada
Total
Source: Glen Buckley, NPK Fertilizer & Advisory Service, Nov. 2011.
% of Total
(1000 metric tons of K2O)
49,197
Canpotex
Source: Glen Buckley, NPK
Fertilizer & Advisory Service,
Nov. 2011.
Summary
(FOB Midwest Wholesale - $/ton)
•  Soil fertility is an investment.
High End
§  “You get out of it what you put into it.”
•  Fertilizer prices in 2014 appear to be
stabilizing
Expected
§  Increasing capacity/supply in near term may even
temper prices.
Low End
•  Long-term prospects appear positive
§  U.S. Energy policy and LNG exploration?
§  P supply is dwindling
§  Industry consolidation and political upheaval?
Source: Bryce Knorr, FarmFutures.com (http://farmfutures.com/story-weekly-fertilizer-review-0-30765)
Resources
Questions?
USDA Economic Research Service (http://www.ers.usda.gov/Data/
FertilizerUse/).
www.georgiaforages.com
Dr. Dennis Hancock
Extension Forage Agronomist
6