Ag Input Prices in 2014

Report
Outlook for 2014 Crop:
Ag Input Prices
Alan Miller
Farm Business Management Specialist
August 16, 2013
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Fertilizers
• Will fertilizer prices bottom during 2013 fall
fill or continue downward into the spring?
• How will a late harvest this fall affect
fertilizer markets?
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Fertilizer Prices
North Central Region, Agricultural Prices, April Report
2014F = Illinois Production Cost Report average on Aug. 15, 2013
1000
Dollars Per Ton
900
800
700
600
500
400
300
200
100
Nitrogen (Ammonia)
Year
Phosphate (DAP)
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Potash
Fertilizer Price Declines This Fall
Type of Fertilizer
Spring 2013
NASS
Survey Prices,
North Central
Region in $/ton
Illinois
Production Cost
Report on
August 1, 2013
in $/ton
Percent Decline
Anhydrous Ammonia
877
695
-21%
Urea
574
470
-18%
28%
395
321
-19%
Phosphate (DAP)
634
535
-16%
Potash
581
502
-14%
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Nitrogen Prices
North Central Region, Agricultural Prices, April Report
2014F = Illinois Production Cost Report average on Aug. 15, 2013
$0.80
Cents Per Pound of Nutrient
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
Anhydrous Ammonia
Year
Urea
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UAN (28%)
U.S. the Low Cost Ammonia Producer
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Purdue University Cooperative Extension Service is an equal access/equal opportunity institution.
Purdue University Cooperative Extension Service is an equal access/equal opportunity institution.
Price Outlook for Nitrogen Fertilizers
• Prices may to drop another 5% or more
depending on the product
– Growing domestic & global capacity (Chinese urea)
– Cheap natural gas in US
– Supply interruptions in Trinidad
– Planting intentions for 2014 crop
– Financial position of crop farmers
– Growth in US market is in UAN and urea
– Go slow on forward pricing 2014 nitrogen needs
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US Production of Phosphate Fertilizer
Outpaces Sales and Exports
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Price Outlook for Phosphate Fertilizer
• Phosphate – large inventories will continue
to exert downward pressure on prices
– Declines of 3-5% from current levels possible
– Spring planting season in the US was not ideal
for P & K application
– Relatively high prices reduce demand
• Late US harvest may also negatively affect
the fall application season
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North American Potash Cartel Reduces
Production to Reduce Supply Glut
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Price Outlook for Potash Fertilizers
• Cartel breakup destabilizes industry
– Beloruskali & Uralkali will now compete for market share;
their joint marketing venture (BPC) ended by Uralkali in
July
– 24% increase in production planned by Uralkali
• Indicative of the production capacity curtailed by
members of the two potash cartels: Canpotex and BPC
• Large drop in world market prices expected
– US court hands down favorable antitrust ruling against
members of the two potash cartels
– Prices likely to decline 5-10% this fall and may decline
even further into next spring
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Seed Price Situation
• What a difference a year makes!
– Good seed production conditions in Midwest
• A little too cool at times
– Quantity and quality look good at this point
• Soybeans – pod set very high
• Corn – crop is much better than last year but two
weeks later
• Corn - early frost is a concern
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350.00
Corn Seed Prices
300.00
y = 18.991x - 37940
200.00
150.00
100.00
50.00
Year
Biotech Corn
Linear (Biotech Corn)
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2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0.00
2002
Dollars Per 80,000 Kernels
250.00
Soybean Seed
Prices
70.00
60.00
y = 3.2182x - 6419
Dollars Per Bushel
50.00
40.00
30.00
20.00
10.00
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
0.00
Year
Biotech Soybeans
Linear (Biotech Soybeans)
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Percent of Planted Acres
Adoption of Genetically Engineered (GE)
Corn and Soybean Seed in Indiana
96
100
90
80
70
60
50
40
30
20
10
0
96
85
85
2004
2005
2006
2007
GE Corn Varieties
2008 2009
Year
2010
2011
2012
GE Soybean Varieties
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2013
Percent of Planted Acres
Adoption of Genetically Engineered (GE)
Corn Seed in Indiana
80
73
60
40
20
10
2
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
Bt Only
Herbicide Tolerant Only
Stacked Varieties
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2013
Outlook for 2014 Seed Prices
• Corn, beans and wheat seed prices will be
up 2-6% overall
• Factors favoring higher prices
• R & D costs to recover
• Two previous years were poor-production, highproduction-cost years
• Corn and bean farmers are perceived to be strong
financially with plenty of liquidity
• Expect mixed bag in product pricing as dealers are
sensitive to declining commodity prices and crop
economics in transition
• Expect bigger increases for newer products
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Crop Chemicals Situation
• Growing sales have lead to higher prices for
chemicals as a group
• Perception that the role for chemicals in
crop protection may be increasing
• How will lower commodity prices affect
farmer spending for crop protection
products?
– Industry expecting large planted acreage
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210
190
Prices Paid Indices
for Farm Chemicals
1990-92 = 100
170
150
130
110
90
70
Year
Herbicides
Insecticides
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Fungicides
Outlook for Crop Chemical Prices
• Expect fungicide and insecticide prices to
increase 2-4%
• Expect herbicide prices to remain flat
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Dollars Per Gallon
Indiana Fuel Prices
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
Year
Diesel (bulk)
L.P. Gas
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Midwest No 2 Diesel Retail Prices (Dollars per
Gallon)
$4.10
$4.00
$3.90
$3.80
$3.70
$3.60
Midwest No 2 Diesel Retail Prices (Dollars per Gallon)
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Texas Spot Prices for Propane
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2014 Fuel Price Forecast
• USEIA forecasts
– 4% lower crude oil and diesel prices in 2014
– 10% higher natural gas prices in 2014
• Propane futures are generally down
moderately for 2014
– Local prices currently around $1.45/gallon
• Factors keeping prices relatively stable
– High level of domestic energy production
– No big shocks to the energy system lately
– Slowly growing US and global economies
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Prices Paid Indices:
Machinery & Wages
1990 - 92 = 100
300
250
2002-2012 average annual rate of increase:
machinery = 7.4%; wage rates = 3.0%
200
150
100
Year
Farm Machinery
Farm Wage Rates
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Sales of Large 2WD Tractors (100+ HP),
4WD Tractors, and S.P. Combines
35000
Number of Units
30000
25000
% increase year over year,
YTD unit sales - June 2013
100+ HP 2WD +27.4%
4WD
+13.4%
S.P. Combines +46.7%
31732
20000
15000
14234
9820
10000
4631
5000
0
6935
2823
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
4WD Tractor
S.P. Combine
2WD Tractor 100+ HP
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Questions, Comments
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