Crop input prices likely to remain high due to a number of factors

Candace Krebs
The Ag Journal
Strain on rail lines, barges, trucks and other forms of transport have led to a run up in the price of nearly all crop input products, from fertilizers to pesticides. A regional supply coordinator for CHS says prices are likely to remain elevated for at least the next eight months and possibly longer.

Input prices are likely to remain high for at least the next eight months, and a recent stretch of cool, wet weather is expected to fade as summer begins, according to two experts featured on a recent corn production webinar.

The webinar was sponsored by the Colorado Corn Administrative Committee and moderated by executive director Nick Colglazier.

Nearly every aspect of crop inputs — from the active ingredients used to make weed control products to the containers to put them in — are in short supply, according to Fred Raish, a fifth generation Coloradan and regional supply coordinator for CHS, one of the nation’s largest farmer-owned cooperatives.

The result is higher prices.

“The one that is going up a ton is phosphates,” Raish said. “It jumped $60 a ton in the last three weeks, and I don’t see any supply side relief in the near future.”

More:Wheat shows promise as harvest approaches despite cold blast and lower forecast

Potash, which provides the soil nutrient potassium, has reached its highest price in six years, he added.

All formulations of nitrogen fertilizer and many crop protection products are also tight, he said.

“My personal opinion is I do not see prices going down,” he said. “As a retailer I think we are in this for the next eight to 18 months.”

“A few companies are doing 2022 (supply) contracts,” he added. “If you think it’s a good deal I would say go ahead and buy your product now.”

Current supply shortages could become even more pronounced by fall, Raish said.

“My fear as a retailer is not having product to reload as we get through the season,” he said.

In the current environment, he urged producers to have a plan.

“If we have a plan, and we stick with it, that helps,” he said. “If you are having conversations with your agronomists and retail partners, that helps them forecast what they need so they can bring it in.”

Prepare to be flexible, he added, and accept a substitute when your preferred product is not available.

Raish attributed the rising costs and declining supplies to an unusual confluence of events rooted in the past year’s pandemic, amplified by increasing dependence on a globalized, consolidated supply chain.

“Around 98% of the crop protection products in the U.S. have some ingredient that comes out of China, India, Israel or Poland. But China is the big one,” he said.

Nearly all of the active ingredient in popular herbicides like glyphosate and glufosinate originate in China, he said.

“First they had COVID, then they had a flood, and then a plant burnt down,” he explained.

As a result, the co-op got roughly a third of the glyphosate it needs for the year, a problem that also hit other input suppliers, forcing them to begin allocating the product.

“Two products that are very tight are fungicides and insecticides,” he added. “I can tell you those actives are very tight and trying to find them is very difficult. I highly recommend looking to get those products ordered as fast as you can.”

The shortages go beyond the items themselves, with a broad spectrum of impacts, he noted.

There’s a lack of everything from inert ingredients, such as adjuvants, to the polymers needed to make jugs, jug caps and totes. There’s also a cardboard shortage, meaning there’s not enough of it to build the boxes to put the jugs in.

“It’s all starting to snowball,” Raish said.

Much of the backlog is simply due to a logistical bottleneck, he explained.

Many products — as well as the raw materials to make those products — are stuck on barges waiting to be unloaded.

Barges haven’t been able to unload due to a lack of employees, temporary port or business shutdowns and closures of waterways. There are also currently not enough trucks, drivers and rail cars to handle demand, he said.

“It’s not just our industry that’s been affected by this,” he said.

Some critical manufacturing plants have also gone offline due to natural disasters or for annual maintenance scheduled months in advance.

The deep freeze in the Southern U.S. in February added to the problem, with many plants temporarily idled.

“You’d be surprised how many fertilizer manufacturing plants exist in Texas, Georgia and Louisiana,” he noted.

Tariffs and international trade tensions are also contributing factors, he said.

Things have been better on the weather front, at least for now.

Eastern Colorado and Western Kansas have made remarkable strides replenishing soil moisture in the last few weeks, according to Eric Snodgrass, principal atmospheric scientist for Nutrien Ag Solutions.

“We beat back the drought that was firmly established here,” he said, pointing to gains on the latest drought monitor map.

The highest level of improvement over the past 12 weeks occurred in Northwest Kansas and Northeastern Colorado, where conditions jumped by four drought classifications.

“To see that happen, that’s a rare thing,” he said.

Meanwhile, the Eastern Corn Belt is burning up, he added.

More:Ag Market Service plugs local food’s role in pandemic recovery, build back better for farmers

“We have good soil moisture saturation here, but the eastern side of the country is very, very dry,” he said.

The relief for the High Plains might not last too much longer. Conditions in the West versus the East are likely to reverse again once summer gets underway, he said. A compilation of models shows that shift occurring in June, with the West cranking up the heat as cooler temps recede.

Though the La Nina weather pattern is fading back to neutral, there remains a pool of cold water in the northern Pacific, representing the negative phase of the Pacific Meridional Mode, which tends to keep the West hot and dry, he said.

He told corn farmers, “even though we had this great start to the season, what you have to think about is there’s still an elevated risk of drought and heat for us in the High Plains, based on the long range forecasts.”