Fertilizer Prices and the Long Run

by David A Widmar

As farmers sharpen their pencils to finalize plans for the 2015 crop year, they are likely find compressed profit margins.  Lower commodity prices are being met by little – if any – relief from input prices. The 2015 Purdue crop budgets estimated variable costs at $458 per acre for raising corn in high productivity soils; up from $450 in 2014. Meanwhile, the budgets estimate revenues at $693 per acre, or 26% lower than 2014.

Given the prominent role that fertilizer plays in the budget it is usually one place that people start to look for savings. This is especially the case for corn. The Purdue crop budgets estimate that fertilizer will represent more than 33% of the total variable costs in 2015. While fertilizer prices have held strong this year, in this post we wanted to provide a long-run perspective on fertilizer prices and shed light into what the future may hold.