Spring 2024 Fertilizer Update: Budget Impacts

Posted by David Widmar on February 26, 2024

With spring planting – and a few big USDA reports – around the corner, this week’s post steps back to review fertilizer prices. While considerably lower, prices remain historically high.

Per acre expense

Figure 1 shows the estimated corn fertilizer expense for a 180-70-70 rate. Current 2024 prices translate into a $160 per acre expense. Those prices are a welcome improvement from 2023 ($202 per acre) and 2022 ($273) levels. However, the expense remains historically high. In 2021, prices were $140 per acre; from 2017 to 2020, the expense averaged just $106 per acre. Sometimes, how painful a situation feels depends on what happened immediately before. $160 per acre feels like a bargain compared to $273, but if 2020 prices were recent memory ($99 per acre), $160 would feel painful.

Figure 1. Corn Fertilizer Expense (IL Spring Avg Prices) – 180-70-70 Rate. Data Source: USDA AMS and AEI.ag Calculations.

Less crop budget distortion

High fertilizer prices disproportionally affect corn budgets. Figure 2 shows the estimated fertilizer expenses for corn and soybeans production using USDA-reported prices and Purdue crop budget application rates. While the cost was a record-high for both crops in 2023, nitrogen pushed corn budgets much higher.

Figure 2. Fertilizer Expense for Corn and Soybean Production, 2010-2024. Data Source: USDA Fertilizer Prices, Purdue Crop Budget Fertilizer Rates, AEI.ag Calculations.


Figure 3 shows the data presented in Figure 2 differently, plotting the difference between corn and soybean fertilizer expense. On average, corn’s fertilizer expense is $80 per acre higher than soybeans. In 2022, however, the gap jumped to $160 per acre. Between 2017 and 2020, budgeted fertilizer expenses favored corn as it was only an average of $57 per acre more than soybean budgets.

For 2024, the difference is back to the long-run average of $80 per acre. This is to say that fertilizer expense is unlikely to be tipping the scale as producers decide between corn and soybean acreage.

Figure 3. Difference Between Corn and Soybean Budgeted Fertilizer Expense.

Share of revenue

Another way to consider the budget pain is fertilizer expenses as a share of budgeted revenue (Figure 3). In 2024, fertilizer represents 20% of budgeted corn revenue, down from 24% in 2023. Between 2017 and 2020, the expense was a much smaller share (14% to 17%). One caveat: This measure doesn’t tell us anything about corn production’s overall profitability. Despite higher fertilizer prices and more budget burden, producers had more profit potential in 2022 than from 2017 to 2021 due to corn prices.

Lastly, consider 2015 and 2023. In these years, fertilizer expenses peaked as a share of budgeted revenue. In both cases, fertilizer expenses were not the highest and had slightly decreased from previous years (Figure 1). Often, lower commodity prices – not peak fertilizer prices – correspond with the largest budget burden.

Figure 4. Fertilizer Expense as a Share of Budgeted Corn Revenue, 2010-2024. Data Source: Purdue Crop Budgets and AEI.ag Calculations.

Wrapping it up

Fertilizer prices and expenses will be lower in 2024, but budget challenges persist. First, the expense remains historically high and an elevated share of budgeted revenue. In both cases, corn fertilizer was $160 per acre and 20% of the budgeted review at their highs of a decade ago.

Lower fertilizer expense will make corn more competitive in 2024 crop budgets.

Still curious? Don’t miss our earlier article about modeling anhydrous ammonia prices (here).

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