Natural gas no longer key to nitrogen fertilizer price
Farm and Ranch October 31, 2011 Natural gas is the primary ingredient in nitrogen fertilizer. So, it seems like common sense that nitrogen fertilizer prices would track those of natural gas. University of Illinois Extension Farm Management Specialist Gary Schnitkey decided to see just how well the two tracked together. He says there was a track able ratio between natural gas and anhydrous ammonia. Schnitkey: “We went back to 2001. Looked at how the ratio of anhydrous ammonia divided by natural gas prices, anhydrous ammonia per ton and natural gas per thousand cubic feet. From 2001 through 2006 anhydrous ammonia prices were 49 times higher than natural prices, so the ratio was 49. ” But recently Schnitkey says that ratio has been as high as one-hundred because he says, nitrogen fertilizer prices are tracking corn prices more than natural gas prices. Schnitkey: “Basically in 2006 we had commodity price increases. We have seen production of corn, wheat and other users of nitrogen fertilizers increase. So we have seen that anhydrous ammonia price and other nitrogen prices increase.” I’m Bob Hoff and that’s the Northwest Farm and Ranch Report on Northwest Aginfo Net. ? ?
