Through the last quarter of 2022, prices of nitrogen, phosphorus and potassium fertilizers continue to diverge. As the price of these fertilizers increased at different rates, and for different reasons starting back in early 2020, the prices continue to respond independently. As phosphorus prices began climbing slowly in 2020, potassium followed later in the winter of 2020/2021.
In agricultural production, the adage “hindsight is 20/20” is all too true in respect to fertilizer purchase decisions the last two years. For example, as prices climbed in 2021, those producers that purchased the elevated prices in the summer of for application in the fall of 2021 made a wise decision as the prices continued to climb through harvest and the following growing season. Delayed fertilizer purchases, and application, has led to increased input costs during the 2021 and 2022 growing seasons. Looking back hesitation has not been a profitable approach to fertilizer purchases, which is often the case in any strong fertilizer price rally. Conversely, those that hesitate may benefit as prices decline.
So, what does the future hold? Foreseeing the future is an educated guess at best. Fertilizer prices are beginning to soften due to reduced demand backed with ample production. The exact opposite market forces that started the climb in prices in the fall of 2020.
How far and how soon fertilizer prices decrease is not yet known, but the signs in the market are showing both phosphorus and potash to be trading sideways to down. The downward pressure is focused on potash, yet phosphorus is responding more. The outside market pressures driving the nitrogen market much more volatile currently. It appears for the near future that nitrogen will remain choppy at best. Of the three main nutrients, nitrogen is impacted the most by the outside markets with continued steady to growing demand in the coming months.