Oil and natural gas prices could push fertilizer costs higher


Oil and natural gas prices could push fertilizer costs higher

Increased oil and natural gas prices triggered by tensions between Russia and Ukraine are adding pressure to ag input prices.

University of Illinois ag economist Gary Schnitkey tells Brownfield Russia is a major supplier of oil and natural gas to western Europe and the US is helping fill that void.

“So we are seeing changes in the way energy moves and that is not helping our energy prices obviously, and will likely keep our inputs at higher levels.”

He says the price of fertilizers like nitrogen, DAP and potash are usually influenced by energy markets.

“Fertilizer is very energy intensive. For nitrogen, a major input is natural gas. So, if oil goes up and natural gas goes up, that tends to put upward pressure on fertilizer prices.”

With all the volatility he suggests farmers should take high coverage levels of crop insurance.

“We might want to do more on the risk management side, maybe do some ECO (Enhanced Coverage Option) or SCO (Supplemental Coverage Option) add-ons.”

Schnitkey says an escalation of the Russia/Ukraine conflict would be a double-edged sword for US grain farmers because it would likely cause an increase in both input and grain prices.

Interview with Gary Schnitkey