Fertiliser prices knock ethanol production

Energy Matters0
Read related story from The Land
For the past year the price of fertiliser has been skyrocketing in the United States, which lead to slow sales and increased stockpiles of fertiliser.

The increase prompted many companies to decrease production.

Last northern autumn prices began to come down, but farmers continued to wait to make fertiliser purchases in the hopes that prices would continue to go down.

Now as planting time draws nearer, fertiliser manufacturers are claiming that delivery channels for fertiliser are unable to move product due to a full supply chain.

According to Mosaic Company chief executive officer James Prokopanko warehouses at all levels – from distribution to retailer – are full.

“I’m not going to forecast a shortage, but capacity is going to be ever more constricted,” Mr Prokopanko said.

One of the big challenges to overcome, according to Mr Prokopanko, is the idling of railways that has occurred in response to the slowdown in commodity shipments.

He says the railroad will need time to get equipment back in operation.

Compounding the problem is the fact that many dealers are reluctant to mark down the price of fertiliser that they purchased last summer when prices were high.

“It’s one thing to have high inventory,” said Mark Gulley, an analyst at Soleil Securities Corp in New York.

“It’s another thing to have high-priced inventory.”

The result in parts of the US are a wide variety when it comes to fertiliser prices.

Due to the clogged supply chain Mmr Prokopanko says there could be a shortage that could limit farmers ability to get the fertiliser they need.

It was estimated on January 6 that US farmers would plant 85 million acres of corn this season, but now with the fertiliser situation as it is, Mr Prokopanko says he expects farmers may plant only 82.5 million acres.