As harvest begins to ramp up, US fertilizer demand prospects continue to be unclear

HOUSTON (ICIS)–As summer draws to a close, the US harvesting efforts are beginning to ramp, but with crop prices still less favorable and farmer economics now back in question, the short-term fertilizer demand prospects continue to be unclear.

The sights of combines rolling across fields collecting up the various acres is usually a sign that a return of applications is coming soon as it is typical after crops are completed for some growers to place another layer of nutrients, especially for those who use nitrogen products.

Yet the level of engagement in further commitments over the next few weeks is not certain, according to market sources.

What is more apparent is that increased demand faces the obstacle of unfavorable crop prices for farmers, projections of less income and a potentially longer stretch of harvest because of the challenging weather at spring interrupting planting schedules.

As an industry participant said it really is simply about price direction at this time and how people are viewing market direction and that “lower prices will stimulate demand. Higher prices will lower demand.”

Currently US corn is at 84% of the reported acreage in the dough stage with soybeans setting pods having reached 89%. Both crops are overall being reported as mostly fair to excellent condition.

Recent crop tours have highlighted the potential for there to be really strong yields upcoming, especially for corn in certain states, which would normally be a positive aspect for farmers, but the projections of a larger harvest this year has also added extra weight upon corn prices.

Farmer economics have recently come under the spotlight with US Department of Agriculture having forecast a drop of net farm income for 2024 of $43 billion year on year with a total income estimate of $116.1 billion.

In 2023, net farm income figure had a 16% drop from 2022, so farmers are set to potentially experience the most significant two-year farm income decline in recent history.

That is one of the troubling factors for those who are looking ahead at the domestic path forward for fertilizer buying and values, with a market participant saying, “I think overall, demand will be low due to farmer economics and poor sentiment in agriculture as a whole.”

Demand is also lagging because there were good refilling efforts over the summer for many products.

Although likely sitting in tanks on farms, or in retail warehouse right now, there should be a good portion of those volumes which will go out over the next three to four weeks, or longer if weather holds favorably.

As a market source said optimism for an uptick is running very thin at the moment “so far it continues to be dead on UAN, and nitrogen demand in general. Maybe pre-river close demand kicks in, but I’m not too hopeful for any rally.”