AXcess News: Fertilizer Shortages Loom, Fueled by Skyrocketing Grain Prices
February 07 2008 - 10:56AM
Marketwired
HOUSTON, TX , this year looks to be a boon for their company.
Earlier this week Itronics reported its fourth quarter and year end
results, which reflected a 25% increase year-over-year. Now the
company says it's ready to meet demand after doubling the capacity
of its plant last year. "Much of each year's sales have been repeat
business, which is very positive," said Dr. John Whitney, Itronics
President.
Now, U.S. distributors of anhydrous ammonia, potash and
phosphates, which make up the bulk of fertilizer sold in the U.S.,
are experiencing unprecedented global demand and in the case of
potash, limited availability in the United States has caused
rationing to occur.
A source inside a major U.S. distributor of fertilizer told
AXcess News Thursday morning that prices of some fertilizers have
doubled in the last two weeks and orders for spring planting will
push prices even higher.
Wednesday the Nebraska Farmer, a major agricultural publication,
reported that "Nitrogen and phosphorus fertilizer prices are
expected to keep climbing in 2008."
The Ag publication quoted University of Nebraska-Lincoln soils
specialist Gary Hebert, who says, "With fertilizer being a
worldwide commodity, the U.S. must compete with other buyers."
Hebert notes that natural gas accounts for 80 to 90% of the cost
of producing anhydrous ammonia, the base material for producing all
other nitrogen fertilizers. But while base prices in the U.S. were
$7, in other countries, like Russia, costs are as low as $2 and
worldwide, demand for nitrogen fertilizers has risen 14%.
The Fertilizer Institute noted that world demand and ethanol
production are among several factors contributing to the increasing
fertilizer prices.
A January 31, 2008 report by The Market, a UK-based newsletter
on fertilizer business, says that ammonia prices are rising and
from Jan. 24th to the 31st, in Tampa, prices have gone up 10
percent in one week alone. Again, global demand is cited.
Ohio Corn Growers Association (OCGA) board members recently met
with representatives from The Fertilizer Institute (TFI), seeking
answers to high fertilizer prices.
"The fertilizer cost and supply issues are a major concern for
our members," said OCGA President Mark Drewes. "Some growers
sometimes can't get the supply they need, while growers have
watched prices go up dramatically."
USDA figures show that from January 2000 to December 2007,
fertilizer prices are up 116 percent. "Rising natural gas prices
are one key factor in fertilizer costs," said TFI Vice President of
Economic Services Harry Vroomen.
While the nation's farming community faces a boom in commodity
prices on the farm for corn (+$5 bushel), wheat (+$9 bushel) and
soybeans (+$13 bushel), planting it this spring is going to be
another matter. But with only a handful of alternative resources
available, agricultural advocates are pushing for legislation to
protect and assure plentiful supplies, though critics argue it
won't come soon enough. Enter Itronics' GOLD'n GRO liquid
fertilizers.
Itronics manufactures its environmentally friendly mix of liquid
fertilizers from recycled photochemicals, which at first blush you
might think is too limited in availability to fill demand. But as
Dr. Whitney said in the Company's Feb. 5, 2008 announcement, "much
of our sales is repeat business."
Whitney noted that this year, Itronics expects more farmers to
be ordering its liquid fertilizer because of how well it works in
drip irrigation applications. In California, Itronics' largest
market, many farmers are squeezed by high costs of irrigation while
the Company's line of fertilizers has been engineered to work well
in those types of applications, says Whitney.
Whitney would not give a forecast on sales growth for Itronics'
GOLD'n GRO line of liquid fertilizers, but he did say that because
of demand, this year may see further "meaningful growth in
revenues."
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