Fertilizer prices dropping, but much of state still drought-stricken

As the stock market fell so did commodity prices.

But nitrogen fertilizer prices didn't immediately follow suit, leaving agricultural producers pinched between low prices for crops and cattle and high production costs, said Texas AgriLife Extension Service personnel.

Fertilizer prices have started to drop, but many Texas producers are still worried about fertilizer costs for winter pastures and for upcoming spring plantings, AgriLife Extension agents reported.

"Concern remains over the high cost of fertilizer," said John Ford, AgriLife Extension agent in Kleberg County , south of Corpus Christi. "Field work for the 2009 crop season has slowed."

"Producers that planted winter pastures, they are in need of fertilizer," said Clint Perkins, AgriLife Extension agent in Wood County in East Texas.

"Hay feeding and protein supplementation is in progress in herds with nursing calves," said Jeff Stapper, AgriLife Extension agent in Nueces County , Corpus Christi. "Few annual winter pastures were planted due to lack of soil moisture and high cost of fertilizer. ... The only land preparation and fertilizer applications occurring are in fields that have acceptable moisture for seeding spring wheat varieties." "Corn growers are preparing fields and putting out anhydrous ammonia fertilizer," said Dirk Aaron, AgriLife Extension agent in Bell County , southwest of Waco. "The cost has come down but conditions are not ideal for placement of this product." But fertilizer prices are now dropping and should drop more by spring planting, said Jerry Hand, sales representative with El Dorado Chemical Company, a manufacturer of industrial and agricultural grade ammonium nitrate. The price of natural gas composes most of the cost of manufacturing all nitrogen fertilizers, Hand said.

So as natural gas price drops followed those of gasoline and diesel, why didn't anhydrous and ammonia nitrate fertilizer costs immediately follow suit?

The answer is in part due to expensive inventory held by wholesalers, Hand said. Many suppliers bought inventories when natural gas prices were historically high in mid-July, which meant historically high manufacturing prices for nitrogen fertilizer as well, he said.

But high costs reduced demand by producers. Wholesalers held on for a while, reluctant to take big losses on their expensive inventories, Hand said.

Now it's a classic case of supply and demand that is driving prices down, he said. Producers should expect prices to drop further, but exactly how much is anyone's guess.

"Nothing is standard in the fertilizer business," said Hand, who is based in Tyler. "What happens in East Texas may be not be the rule for the rest of the state. It's an international commodity."

Hand noted that producers also should soon see lower costs for phosphate, but "very little relief" on potash prices.

"Potash prices are controlled by a few large producers, mostly in Canada," he said.

The following summaries were compiled by AgriLife Extension district reporters this week:

CENTRAL: Producers continued to feed livestock to maintain condition. Small-grain pastures were grazed short with no regrowth. The pecan crop yields were only about 10 percent of normal; quality was poor. Stock tanks were nearly dry. Lack of rain has prevented producers from planting small grains. Winds were high, and some wildfires were reported.

COASTAL BEND: Dry conditions persisted. Grazing quantity and quality declined rapidly, as did the body condition of cattle in some herds. Hay and protein were being supplied to herds with nursing calves. Because of lack of soil moisture and the high cost of fertilizer, few winter-annual pastures were planted.

EAST: Producers in most counties were feeding hay and supplements. Lack of moisture and colder temperatures slowed the winter-forage growth in many areas. Many producers may hold on to calves until after the New Year. Feral hog damage continued.

FAR WEST: Conditions were windy and dry with cooler daytime temperatures, with some nights dropping below freezing. Ponds were freezing at night which might diminish algae production. Winter wheat was suffering from lack of moisture. Onion plants became dormant due to freezing temperatures.

NORTH: Soil moisture ranged from adequate to very short. Mild to cool days were the rule with some wind. The temperature dropped below freezing in some counties during the early morning hours. Producers continued to be concerned with dry conditions. Wheat, small grains and winter-annual pastures need rain. Oats plantings were completed. The pecan harvest was nearly completed but yields were down. The sorghum harvest was also completed. Winter supplemental feeding was in full force, with a few producers using stockpiled grass for forage supplemented with protein. Livestock were in fair to good condition. Winter pastures have been planted, but acreage is down significantly from last year. The sweet potato harvest was complete, with most producers reporting higher yields than in previous years. The preparation of land continued for spring planting. Range and pasture conditions were fair to good.

PANHANDLE: Soil moisture varied from very short to surplus with most areas reporting adequate. Wheat varied from poor to excellent with most areas reporting fair to good. Rangeland varied from very poor to fair with most areas reporting fair. Cattle were reported in good condition. High winds and dry conditions increased the danger of wildfires. The cotton harvest was ongoing.

ROLLING PLAINS: Cooler temperatures prevailed, with lows dipping below 20 in some counties and heavy frost coming several mornings in a row. The cotton harvest should be done in the next few weeks. Yields weren't good and prices have drastically declined. The sorghum harvest was also in full swing, and yields were good, although the price has dropped since planting. Some producers said they will plant sorghum again next year instead of cotton. Livestock were in good condition, but rains are needed for grazing on winter wheat. Pastures were beginning to show stress from lack of moisture. Producers started supplemental feeding, but only on a small scale. If farmers don't receive a rain within the next few weeks, they will be forced to start selling off cattle or begin heavy supplemental feeding.

SOUTH: Except for the southern most counties, soil moisture was very short. In the northern counties, the peanut harvest was nearly complete. The harvesting of cabbage and spinach was ongoing, and the planting of wheat and oats was complete. Most of the wheat and oats were already emerging. In the eastern counties, oats were declining and may soon fail unless significant moisture is received quickly. Moisture is also needed for spring wheat to be sown. Field work for the 2009 crop season has slowed. In the western counties, onions progressed well under irrigation, and processing of spinach was expected to begin soon. Preparations for tomato harvesting began. With winds picking up and temperatures dropping, range and pastures continued to decline across the region. These conditions also raised the risk of wildfire. Overall, cattle body scores were fair due to forage supplies and supplemental feeding.

SOUTH PLAINS: Conditions for harvesting were favorable except for one day of wind gusts of up to 40 mph. Nighttime temperatures dipped as low as 19 degrees. Soil moisture was short. The cotton and sorghum harvests were nearing completion thanks to the open weather. Some corn remained in the field due to late planting and the grain not drying down. But the acreage left is small, and most corn harvest was completed weeks ago. Winter wheat was in fair to good condition. Irrigated acres progressed well, but dryland wheat desperately needed rain. Pastures and ranges were in fair to good condition. Cool-season grasses need rain to get through the winter. Livestock were in mostly good condition.

SOUTHEAST: Some counties remained dry, and ryegrass growth was limited. Winter annuals were slow to produce because of lack of moisture and below-average temperatures. Slightly fewer acres of ryegrass were planted this year than last.

SOUTHWEST: The region has not had significant moisture since early September. The soil profile was completely dry. Forage availability was below average going into the winter dormant season. Even if it rains now, sufficient over-wintering forage will not be available to sustain current livestock and wildlife during the winter months. The cabbage, cucumber and spinach harvests were ongoing. Other fall vegetable crops were making good progress under heavy irrigation. Planting row crops under dryland conditions next spring may be very limited unless above-average rainfall is received during winter.

WEST CENTRAL: Cool to cold temperatures and extremely dry conditions continued, with the first hard freeze reported. Burn bans were ordered in many areas. The cotton harvest continued with average yields reported. Small grains were stressed, and their growth was at a standstill due to dry, cold conditions. Range and pastures were in poor condition with little to no winter grasses. Water levels in stock tanks and ponds continued to drop. Livestock remained in fair to good condition as producers dramatically increased supplemental feeding. Many producers were reducing herds because of lack of grazing. The pecan harvest was nearly complete, but yields were very light.

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