Soaring fertilizer costs and higher grain prices overshadowed news of the 2021 crop’s record average yield. In November, the U.S. Department of Agriculture revised corn yield to 177 bushels per acre. The previous record was 176.6 bushels in 2017. This increased the corn production estimate by 43 million bushels to 15 billion, second only to the 2016 crop.
Texas A&M University agriculture economist Mark Welch says the most recent run-up for fertilizer costs was in 2014.
Increased Prices And Demand
“When grain prices go up, fertilizer follows based on demand associated with opportunistic market conditions,” Welch says. “This typically includes planting more acres and managing for maximum yields.
“I understand watching fertilizer prices has been a jolt and is causing anxiety among producers. But I want to emphasize there are better marketing opportunities because grain prices are so good.”
Efficient fertilizer application will be an important component to budgeting this season. Welch recommends assessing available soil nutrients through rigorous testing and pinpointing fertilizer needs.
“Producers should also consider split applications and timing fertilization in ways that maximize crop progress and avoid degradation by environmental conditions, including rainfall,” he says. Establishing nitrogen-fixing cover crops is also a good investment this year.
For marketing, Welch says locking in contracts at current prices could reduce risks associated with potential price dips in futures markets. Otherwise, producers may be in a situation similar to 2013 where higher input costs secured in the winter and spring gave way to lower crop prices by harvest.