Once upon a time a good way to predict fertilizer prices was to follow the futures market for natural gas, the feedstock for nitrogen nutrients. But that relationship broke down as strong demand meant buyers were willing to pay more than just the cost of production, transportation plus normal mark-ups. Not surprisingly, profits for manufacturers soared to record levels.
Margins for fertilizer companies moved into the black last fall when prices collapsed for most products, with ammonia falling well under just the cost of natural gas needed to manufacture it. A wave of plant closings followed, as the industry tried to realign supply and demand.
Now those plants are starting to open as prices and margins improve. Farmers are again buying fertilize ahead of spring, and cheaper natural gas is providing an additional boost to the manufacturers' bottom line.
To read Bryce Knorr's complete weekly fertilizer review, click HERE.
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