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Expect Higher Input Costs

Amanda Huber, Editor

Amanda Huber, Editor

International trade is a critical part of the agriculture industry, but U.S. producers have become an unwitting subject in the recent trade-off of tariff increases between China and the United States. Because of that, University of Arkansas Division of Agriculture Extension economist Scott Stiles is keeping producers up to date on input prices that could affect crop selection for next year.

“Urea prices at New Orleans (NOLA) continue to rise, finishing last week at an average price of $316 per ton,” Stiles says. “Barge urea prices have now increased for ten (10) straight weeks at the Gulf. The last time Gulf urea was above $300 was in June 2015. Urea prices in the NOLA region are up $90 per ton or 40 percent compared to the same week a year ago.”

According to Stiles, several factors are combining to drive urea prices higher, including that it is likely less supply from China will be available following the latest round of U.S. tariffs that went into effect in September.

“Virtually all types of fertilizer exports will be subject to the initial 10 percent tariff rate, which later increases to 25 percent on Jan. 1, 2019,” he says.

The U.S. tariffs list on Chinese goods include urea, ammonium sulphate (AS), ammonium nitrate (AN), urea ammonium nitrate (UAN), diammonium phosphate (DAP), or monoammonium phosphate (MAP).

Higher energy prices are another factor that Stiles says increases urea manufacturing and transportation costs.

“West Texas Intermediate crude oil is currently trading near $75 per barrel; the highest since November 2014. Announced sanctions on Iran and the inability of the OPEC cartel to produce more oil are both factors that have supported energy prices in recent months. Iran is also a producer and exporter of urea fertilizer,” he says.

Despite these prices for fertilizer elements, Stiles says the forecasts are for corn, wheat, cotton and rice to all gain acres in 2019.

Corn acres in the United States are anticipated to increase 4.4 percent next year, which is nearly 4 million acres. Soybeans are expected to be down several million acres next year.

Send comments to Corn South, 875 W. Poplar Ave., Suite 23, Box 305, Collierville, TN 38017. You may also call 901-767-4020 or contact Lia Guthrie at lguthrie@onegrower.com or Amanda Huber at ahuber@onegrower.com.