None of us, and especially those of us in the turf health business, want to see fertilizer prices spike like they did a couple of years ago. Likely they won't, not to that extend anyway. Even so, if you're buying turfgrass fertilizer next season, you might want to heed Lebanon Turf's advice to watch corn prices.
“As corn goes, so goes nitrogen and as nitrogen goes, so go fertilizer prices,” said Harry L. Mathis, corporate director of Materials, Distribution and Order Fulfillment for Lebanon Seaboard Corp., parent company of LebanonTurf.
The USDA’s corn forecast – recently adjusted downward 3.6% – caused a ripple effect that likely will be felt at golf courses, sports fields and anywhere turf managers rely on nitrogen-based fertilizers. The forecast sent corn futures soaring to near $6 per bushel, a price that encourages farmers to plant more corn, which in turn, requires increased nutrients. The subsequent jump in worldwide demand for nitrogen increases costs to fertilizer producers.
“We were sailing along in pretty stable condition this summer, and then the USDA numbers and the corn harvest sparked the markets,” Mathis said. “It just goes to show how fragile and interconnected the supply chain is.”
While market conditions have stabilized in the last several weeks, Mathis predicts that prices for fertilizer products high in nitrogen, phosphorous and potassium will increase by 10% or more for the 2011 growing season. Any disorder in the worldwide supply chain, which could be brought on by disruptions at nitrogen plants and shipping interruptions, could cause another spike in costs. “N, P and K are in the mix together,” Mathis said.
“The corn number is real; the nitrogen situation is real, and when the season hits, low inventories of raw materials stateside could force some significant availability and pricing issues in the spring,” he said.