High gas prices hamper corn crop outlook

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High gas prices hamper corn crop outlook

Carolyn Sheridan

Staff Writer

Is corn becoming too expensive to plant?

That's a question many area corn farmers are asking this spring as high natural gas prices send the price of nitrogen fertilizer sky rocketing. A situation that is compounded by a depressed corn market.

Natural gas accounts for more than 80% of the production costs for anhydrous ammonia (at 86% nitrogen), a common source of nitrogen fertilizer. The current price of natural gas is about four times higher than prices one year ago, causing nearly half the country's fertilizer plants to halt production. It is more economical for fertilizer plants to resell their natural gas supplies instead of producing ammonia, creating the potential for a fertilizer shortage. It also makes it difficult for farmers and their suppliers to plan for spring.

Mike Holtkamp, who owns a farm north of Donnellson, plants 315 acres of corn and 330 acres of soybeans but admits the outlook for the corn crop is pretty dim.

"There's not a lot of optimism about grain prices increasing this year," he says in a phone interview. "Last year corn sold for $1.80 to a $1.90 a bushel. The chance of the price going up is pretty slim. It's going to be hard to justify (planting corn); more will switch to soybeans."

Soybean plants take nitrogen from the air and store it in root nodules which release the nitrogen back into the soil. This is one of the reasons why farmers rotate their soybean and corn crops: What the corn depletes, the soybeans add back. Soybean fertilizer contains very little nitrogen, especially when compared to corn fertilizers.

Last year anhydrous ammonia and other liquid fertilizers cost between $220 and $240 a ton. "At $200 a ton, it would cost me about $45 an acre. Or 150 to 200 pounds of N an acre," says Holtkamp.

Something that puzzles Holtkamp and other farmers is why there was a nitrogen "shortage" at $250 a ton but now that it's over $400/ton, there's no shortage of available nitrogen.

"It's definitely going to be a problem," he said.

One area fertilizer dealer would disagree saying they (his company) are in a bind as well. Last year's nitrogen surplus is already spoken for, and as of March 13th they are still unable to get it from their suppliers.

Holtkamp likens the nitrogen shortage to the gasoline shortage.

"Not too long ago gasoline prices went way up because of "shortages'. Officials looked at the prices up the chain (of suppliers) and the closer they got to the top, gas prices started coming down."

"Of course now we're happy to pay a lower price because it's lower than the high." But he adds, what we pay now at the pump is still higher than we were paying before the price jump.

"And we're happy!" Holtkamp laughs then adds, "I think maybe it (the price jump in nitrogen) needs to be looked into. Can we lay the blame somewhere?"

Other companies say getting nitrogen isn't a problem. An Illinois dealer said his company had plenty of nitrogen available for spring use, but it's about $110 more a ton than it was last fall. "Farmers who could fertilize in the fall are feeling pretty full of themselves right now." He clarified by saying that most Illinois farmers didn't get to harvest until late last fall so many of them didn't have the time or the manpower to fertilize for the 2001 crop before winter set in.

A random survey of area (Iowa, Illinois, and Missouri) dealers showed the price of anhydrous ammonia ranged from $410/ton to $425/ton. Iowa and Missouri appear to have seen the biggest price increases - almost $200/ton more than last fall.

Where dealers are having difficulty getting anhydrous, there are other forms of nitrogen available to customers: In dry form which releases N more slowly but costs about the same; or another liquid solution with lower nitrogen content which would lower the cost some.

Lee County Extension Director Bob Dodds says the best defense at the moment against the increase in nitrogen costs is to not apply more than is needed. According to Dodds the extension service has testing available to farmers who want to be as exact as possible.

Lee County has about 77,000 acres in corn and farmers will need to purchase about 7,000 tons of nitrogen this spring. "It's going to be tough on Lee County farmers. No doubt about it," Dodds said.


-- Martin Thompson (mthom1927@aol.com), March 16, 2001

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