10/11/07 Fertilizer costs vs natural gas costs

Ammonia is the building block for all nitrogen fertilizers and 75 to 90 percent of the cost of producing a ton of ammonia is from natural gas. Chris McGill of the American Gas Association says there's been nothing but good news so far this year. MCGILL "No supply interruptions, no hurricane. Expectation for price, the real price on a day to day basis everything has come down a little bit. Analysts are pointing to an average price for '07 to be slightly less than '06." So with a drop in natural gas prices it will cost less to produce fertilizer. Harry Baumes of USDA's Office of Energy says don't hold you breath waiting for lower fertilizer prices. BAUMES "Unfortunately the demand for fertilizers worldwide is very strong. Even though gas costs may be declining the demand for fertilizers is very strong and that's keeping prices high." Baumes says the fertilizer producers are the ones who will save money but it's unlikely that Idaho and other American farmers are going to get any real financial benefit from all of this. Voice of Idaho Agriculture Bill Scott