Growing demand for fertilizer keeps prices high

May 24, 2013

Steadily growing global demand for grain crops has generated higher crop prices and increased demand for fertilizers, particularly imported fertilizers. As corn prices remain high, U.S. corn growers are expected to plant 97.3 million acres of corn in 2013, representing the largest planting since 1936.

In 2011, the United States imported $13.4 billion worth of fertilizer and produced $24.1 billion worth of fertilizer. The dollar value of imported fertilizer to the United States increased 466.2 percent between 2002 and 2011, more than three times the growth rate of domestic fertilizer production during the same period.

Dollar value of U.S. fertilizer production and imports 2002–2011
YearU.S. productionU.S. imports

2002

$9,965,000,000$2,361,746,253

2003

11,026,000,0003,572,452,412

2004

12,551,000,0004,382,482,411

2005

13,455,000,0006,104,231,573

2006

13,237,000,0005,802,049,514

2007

18,222,000,0007,608,153,202

2008

25,226,000,00013,420,200,284

2009

19,845,000,0005,721,979,839

2010

20,985,000,0009,461,057,401

2011

24,135,000,00013,373,370,150

Prior to 2010, import fertilizer prices were directly influenced by the demand for fertilizer as well as the price of natural gas, a key component in the manufacture of many fertilizers. Falling domestic natural gas prices over the past few years appeared to have had comparatively little impact on fertilizer prices, which trended up primarily because of ever-increasing demand for fertilizer. Because domestic fertilizer production was insufficient, fertilizer imports increased in order to supply the demand generated by high grain prices. However, the second half of 2012 exhibited a reversal of the recent trend. Although grain prices reached record highs, fertilizer applications were reduced for crops that were failing from drought conditions.

Import and export price indexes, December 2007–March 2013
MonthImport fertilizerExport cornImport natural gas

Dec 2007

100100100

Jan 2008

110.5111.9102.2

Feb 2008

124.3120.8111.2

Mar 2008

130.6130.5118.6

Apr 2008

136.1137.3126.5

May 2008

138137.3138.8

Jun 2008

146.9141.7152.1

Jul 2008

159.2163.7159.2

Aug 2008

165.9116.9126.3

Sep 2008

189.7129.8102.9

Oct 2008

190.4107.798.9

Nov 2008

184.496.395.2

Dec 2008

168.480.295.1

Jan 2009

137.1100.188.1

Feb 2009

133.393.976

Mar 2009

133.689.564.5

Apr 2009

128.497.554.8

May 2009

142.899.352.5

Jun 2009

130.5107.154.7

Jul 2009

114.686.150.1

Aug 2009

114.788.350

Sep 2009

119.381.942.9

Oct 2009

129.589.350.4

Nov 2009

131.695.664.1

Dec 2009

133.896.873.2

Jan 2010

136.599.186.2

Feb 2010

138.990.686.5

Mar 2010

14793.574.2

Apr 2010

150.686.563.7

May 2010

152.891.461.4

Jun 2010

146.487.261.3

Jul 2010

143.990.764.5

Aug 2010

141.995.361.3

Sep 2010

146.3105.257.7

Oct 2010

154.6114.455.7

Nov 2010

162.913656.8

Dec 2010

166.4130.662.6

Jan 2011

176.8140.969.1

Feb 2011

179.2151.775.1

Mar 2011

182.6165.165.4

Apr 2011

187.3169.464.7

May 2011

189.6167.766.7

Jun 2011

199.117366.4

Jul 2011

204.7153.164.1

Aug 2011

205.8165.466

Sep 2011

208.7173.963.2

Oct 2011

211.1140.957.2

Nov 2011

215.5153.559.2

Dec 2011

209140.956.9

Jan 2012

199.5149.753.1

Feb 2012

196.2149.347.4

Mar 2012

192.1153.141.3

Apr 2012

204.5153.735.4

May 2012

220.4153.534

Jun 2012

221.3140.736.7

Jul 2012

207.4167.741.3

Aug 2012

209.4186.343.4

Sep 2012

210.3182.643.2

Oct 2012

209.1177.546.5

Nov 2012

206.6175.757.4

Dec 2012

204.6178.666.9

Jan 2013

200.5163.862.8

Feb 2013

199.7171.961.6

Mar 2013

199.5168.860.7

Insufficient domestic fertilizer supplies and rising grain prices created greater demand for imported fertilizer and a subsequent rise in import fertilizer prices. Import fertilizer prices advanced 93.1 percent for the 3-year period from July 2009 to June 2012. The June 2012 price peak coincided with the high growth season, when most nitrogen fertilizers are applied to corn.

Grain prices have increased over the past 3 years. Corn has been the most important of the grains, accounting for the most acreage, using the most fertilizer, and recently setting price records in 2012.

Inorganic fertilizer production is an energy-intensive process, relying heavily on electricity, petroleum, and especially natural gas for manufacture and transport. Natural gas constitutes approximately 74 percent of the energy used to manufacture fertilizers. High energy prices were cited as a principle factor that led to the record fertilizer prices reached in 2008.

These data are from the International Price Program. To learn more, see “Growing demand for fertilizer keeps prices high” (HTML) (PDF), by Jon Ruder and Edwin Bennion, Beyond the Numbers, May 2013.

SUGGESTED CITATION

Bureau of Labor Statistics, U.S. Department of Labor, The Editor's Desk, Growing demand for fertilizer keeps prices high on the Internet at http://www.bls.gov/opub/ted/2013/ted_20130524.htm (visited April 25, 2014).

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