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Where Might Nitrogen Fertilizer Prices Be Headed?

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Listed:
  • Paulson, Nick
  • Schnitkey, Gary
  • Zulauf, Carl

Abstract

After record farm incomes in 2021 and 2022, commodity prices have declined while input costs have remained elevated resulting in a margin squeeze and much lower incomes in 2023 and projected for the current 2024 crop year. Fertilizer prices have been a major area of interest and concern over the past few crop years, reaching historic highs in 2022 and exhibiting increased volatility relative to historical experience over the past decade (see farmdoc daily articles from June 13, 2023, August 15, 2023, and September 19, 2023). In today’s article we revisit a statistical regression model fit to monthly anhydrous ammonia prices reported in Illinois. Historically there exists a strong positive correlation between anhydrous prices, corn prices, and natural gas prices. Current corn and natural gas prices levels suggest anhydrous ammonia prices could continue to trend downward from recent averages of around $800 per ton to $700 per ton later this fall. Futures market expectations would suggest a smaller decline to around $750 per ton this fall. However, returns to higher natural gas and/or corn prices could result in anhydrous prices at current or higher levels this fall while lower corn and natural gas prices could support even greater further declines for anhydrous prices.

Suggested Citation

  • Paulson, Nick & Schnitkey, Gary & Zulauf, Carl, 2025. "Where Might Nitrogen Fertilizer Prices Be Headed?," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 14(114).
    • Handle: RePEc:ags:illufd:358492
    DOI: 10.22004/ag.econ.358492
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    File URL: https://ageconsearch.umn.edu/record/358492/files/fdd061824.pdf
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    References listed on IDEAS

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    1. Schnitkey, Gary & Paulson, Nick & Zulauf, Carl & Swanson, Krista & Baltz, Jim, 2021. "Nitrogen Fertilizer Prices Above Expected Levels," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 11(165), December.
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