From Too Much Fertilizer to Not Enough
Clogged supply chain could hinder corn crop.
Compiled by staff
Published: Feb 20, 2009
For the past year the price of fertilizer has been skyrocketing, which lead to slow sales and increased stockpiles of fertilizer. The increase prompted many companies to decrease production. Last fall prices began to come down, but farmers continued to wait to make fertilizer purchases in the hopes that prices would continue to go down.
Now as planting time draws nearer, fertilizer manufacturers are claiming that delivery channels for fertilizer are unable to move product due to a full supply chain. According to Mosaic Company Chief Executive Officer James Prokapanko, warehouses at all levels - from distribution to retailer - are full.
"I'm not going to forecast a shortage, but capacity is going to be ever more constricted," said Prokopanko.
One of the big challenges to overcome according to Prokopanko is the idling of railways that has occurred in response to the slowdown in commodity shipments. He says the railroad will need time to get equipment back in operation.
Compounding the problem is the fact that many dealers are reluctant to mark down the price of fertilizer that they purchased last summer when prices were high.
"It's one thing to have high inventory," said Mark Gulley, an analyst at Soleil Securities Corp. in New York. "It's another thing to have high-priced inventory."
The result in parts of the U.S. is a wide variety when it comes to fertilizer prices. Due to the clogged supply chain Prokopanko says there could be a shortage that could limit farmers ability to get the fertilizer they need.
It was estimated on Jan. 6 that U.S. farmers would plant 85 million acres of corn this season, but now with the fertilizer situation as it is, Prokopanko says he expects farmers may plant only 82.5 million acres.
Permalink: Click here
Tagged: fertilizer, fertilizer prices
|