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[00:00:00] Mike Howell: The Dirt with me, Mike Howell, an economics podcast where I present the down and dirty agronomic science to help grow crops and bottom lines. Inspired by ekonomics.com farming’s go-to informational resource. I’m here to break down the latest crop nutrition research use, and issues helping farmers make better business decisions through actionable insights. Let’s dig in.
[00:00:39] Mike Howell: Well, hello again everyone. Welcome back to the Dirt. We’ve got a familiar face with us today. We have Mark Tully joining us, and if you’ve been listening to The Dirt for very long, you’ve heard Mark a time or two on the program. Mark, welcome back to the Dirt and if you will kind of introduce yourself to our new listeners.
[00:00:53] Mark Tully: Yeah, thanks so much for having me again. Always. Great to be here on The Dirt. I’m Mark Tully, part of our global market research team here at Nutrien. Myself and my team are focused on the fertilizer and egg commodity markets, and happy to share our thoughts on recent developments today.
[00:01:09] Mike Howell: Mark, we’re glad you were able to join us today.
[00:01:11] Mike Howell: We wanted to take a few minutes and talk about what. Fertilizer prices are doing what grain prices are doing, that kinda stuff. We know most people have got their crops in the ground, but there’s still a few people that haven’t been able to get that done. The weather’s just prevented it, and they may be having to make a change in the crop that they planned to plant this year.
[00:01:28] Mike Howell: Let’s start off and look at nitrogen. What’s our nitrogen look like going into this top dress season? And I’m hearing things about some limited supply of certain products. Can you talk about this?
[00:01:37] Mark Tully: Yeah, absolutely. Nitrogen has been. Somewhat volatile this spring, and we’ve seen some pretty dramatic increases in price during the April and may period, although it seems like the market’s settling down a little bit at the moment.
[00:01:50] Mark Tully: Ultimately, the market had to digest planting 95 plus million acres of corn when that March perspective planting came out. And what’s really important to remember? With not only nitrogen prices globally, but in North America is that nitrogen’s a globally traded commodity and North America imports a lot of nitrogen, and as we were heading into this spring season, there wasn’t enough imports happening at this point in time.
[00:02:14] Mark Tully: When I look back and even look at it on a calendar year to date basis today, ammonia imports are down 22% year over year. UAN imports are down 6% year over year. But more importantly, when we look at it on a fertilizer. Year basis, imports are down 14% on UAN. And when we start to take into account net trade imports, minus the exports that have happened, UAN and ammonia are down significantly.
[00:02:40] Mark Tully: So on a fertilizer year to date basis for UAN, that net trade balance is minus 42% year over year. And for ammonia minus 34% year over year. So as we entered this spring. North American market was in a tight position from a nitrogen supply side perspective. And as we enter this side dress period and top dress period, like you say, the market’s still fundamentally somewhat tight here on nitrogen and so can anticipate the market just to be a little bit more of a premium.
[00:03:08] Mark Tully: When we think about it on a year over year basis, a few global. Things are also impacting nitrogen as well. First thing is we enter the hot summer months. Producers in Egypt have had to cut back on production as they’re balancing natural gas across their urban centers and their industrial users to keep buildings cool with air conditioning and.
[00:03:28] Mark Tully: We’re seeing some production impacts in that part of the world. Then we’re also seeing some change in export availability outta China. They’re a major exporter of nitrogen products and urea in particular, and they’ve come out with their quota, how much they’re going to be allowed to export from May to September, and it’s only 2 million tons.
[00:03:47] Mark Tully: Market would’ve thought there’d be more available from China, and so that was a little bit of a surprise and a little bit tighter than expected heading into the summer as a result. The other interesting aspect of that is the Chinese have put in a restriction on them participating in Indian trade.
[00:04:03] Mark Tully: India’s a big importer of urea, and historically, a large proportion of their urea did come from China. That’s something to watch as well, how those trade flow dynamics are gonna shift. As we enter these summer months, the last thing that we need to keep in mind is there’s some normal turnaround season here coming into North America.
[00:04:21] Mark Tully: Some of that supply availability may be impacted as plants have to go through that routine maintenance so that they can run regularly for the rest of the year. We’ll have to watch availability as a result of that. Ultimately, as we. Think about the nitrogen outlook. Supply has just been tighter than initially anticipated, and it’s really played out through this whole spring season, and it’s feeling that way a little bit as we move into the summer months as well.
[00:04:45] Mike Howell: Mark, you’re talking about a tight supply. Is there gonna be enough nitrogen to go around or somebody gonna have to do without?
[00:04:51] Mark Tully: Well, I think when it’s gonna be highly dependent, ultimately on where acreage lands, right? You’ve mentioned there’s gonna be likely some mix changes, maybe a little bit of prevent because of some of the moisture and cool weather that we’ve seen this season that’s slowed down planting in particular regions like the US.
[00:05:08] Mark Tully: Central south and parts of the US Eastern corn Belt. But I would say that when we think about it, just from the balance of we were gonna do 95 million acres of corn, doesn’t feel like there’s been enough nitrogen for that level of acreage.
[00:05:21] Mike Howell: Okay. Well, mark, let’s move on to the next nutrient that we worry about.
[00:05:25] Mike Howell: What about phosphorus? Do we have an outlook for phosphorus? What can you tell us?
[00:05:29] Mark Tully: Well, I don’t think I can use any other word other than tight when it comes to phosphorus. I wish I could use something different, but I feel like a bit of a broken record when it comes to that macronutrient, probably since we’ve been chatting on the dirt mic.
[00:05:41] Mark Tully: But ultimately the market is tight and it’s a function of I. Changing trade dynamics in the phosphate marketplace. The most important piece of that puzzle has been China. I talked about that with urea, but there’s a similar story here in dry phosphate fertilizers outta China. So DAP and MAP. They’re under a quota system today for their ex.
[00:06:03] Mark Tully: And continue to restrict total volumes. There’s just been really rapid growth in Chinese demand for phosphate fertilizers, and so the government policy there has been to adjust how much they’re allowing to reach global markets and instead focusing on their domestic supply availability. The impact of that is pretty significant.
[00:06:22] Mark Tully: Historically, before these export restrictions have been put into place, China was exporting around 10 million tons per year for d and. Just for this Q3 quota. So from May to September, they’re only gonna be allowed to export somewhere between three, three and a half million tons, and there was practically zero exports for the first four months of the year from January through April.
[00:06:43] Mark Tully: When we think about what that means for supply, I. Well, exports from China are probably gonna be no more than half of normal levels or pre-ex export restriction levels, and there just isn’t another exporter around the world who can pick up that kind of volume in this period of time. And so we’re feeling that in the phosphate markets as a result.
[00:07:02] Mark Tully: Import markets around the world are competing for what little export availability there is, and we’re seeing prices rise and ultimately it’s impacting affordability and we’re likely gonna have to see some impact to demand as a result of that is there just isn’t enough phosphate supply to go around at the moment.
[00:07:19] Mark Tully: The one thing I’m thinking about is ultimately in North America we’ve seen several years of lower demand from a phosphate perspective, largely because of the availability of supply. I think about soil banks and phosphate and. That’s something I think we’re gonna have to watch as we move forward here.
[00:07:35] Mark Tully: Even just keeping those maintenance level of phosphate applications going on.
[00:07:39] Mike Howell: Yeah, and that’s something we’ve talked about several times here on the podcast. We can only take out of that bank until we run out, and once we hit that edge, we don’t wanna fall over that cliff. So we need to pay attention to this and make sure we know where our soil levels are.
[00:07:52] Mike Howell: Mark, what about potassium?
[00:07:53] Mark Tully: Yeah, potassium has been a little bit of a different story. It’s a market that’s been driven by really excellent demand, and in part because affordability has been good, not just in North America, but all over the world. We’ve seen really strong demand in Latin America, parts of Asia as growers continue to take advantage of that relative affordability for potassium and potash in general, and apply potash to their needy crops.
[00:08:19] Mark Tully: One of the interesting pieces. This calendar year with that really strong demand. There have been a few supply side stories developing some maintenance turnarounds in places like Russia and Belarus that have potentially impacted supply a little bit. Laos has been unable to increase their export capacity.
[00:08:38] Mark Tully: I think they’ve. Planned for a long time here to keep adding volume to the market, but they haven’t been able to do that yet this year, and there’s been reduced availability from Chile. You know, they’re changing their production plans and so that’s impacting total supply a little bit. We have seen some strength in the markets when we think about potassium or pot ash prices from the start of this year and now where we’re at today, but I think affordability.
[00:09:02] Mark Tully: Continues to be relatively attractive for that product as we head into the summer, and so expect demand to continue to be strong really around the globe here because of that reason, the markets today really focused internationally at the moment, watching Chinese Indian contract settlements and. The Southern hemisphere demand as we have the monsoon season starting to kick off in India, and growers in Latin America are starting to think about their next season for growing.
[00:09:29] Mark Tully: Those are sort of the big storylines I’m thinking about in Potash here over the next couple of months.
[00:09:34] Mike Howell: Well, let’s switch gears a little bit and talk about some of our grain commodity prices. I think I heard something the other day that. Brazil may be looking at a record soybean yield. Is that true? And how would that affect us soybean prices?
[00:09:47] Mark Tully: Yeah, great question. You know, I’ll hit on a few things. I think when it comes to green prices is, it’s been a pretty interesting and volatile year, frankly, so far in the crop commodity space. Hitting on that. Latin American, Brazilian story. The production’s been really strong in Brazil this year. The weather’s been good.
[00:10:04] Mark Tully: Lots of acres went in, yields have been strong, and there’s been excellent export demand for the Brazilian cross Part of that opportunity that’s developed for Brazilians because of. Some of the US China negativity and trade that’s developed over the last few months. Also expecting a good corn harvest in Brazil for their second corn crop that’s ongoing right now.
[00:10:25] Mark Tully: A lot of private analysts are expecting production there to help produce the current USDA expectation overall. What’s that gonna mean for crop prices? Well, I think a lot of this has been talked about pretty heavily for a while. At this point, my, my view is a lot of that’s probably baked in to where prices are today already, but certainly if we start to continue to see crops get bigger in the southern hemisphere can definitely have an impact from a bearish perspective on prices if there’s more supply available.
[00:10:54] Mark Tully: But I think today the big thing to watch really is. North America and the weather market that we’re in today, planting happened really fast, which is probably limiting acreage loss in the large proportion of the North American market. But you mentioned earlier there has been some weather challenges, I think, of the US Mid-South and parts of the Eastern corn belt that could result in some prevent plant or some acreage mix there that we’ll have to watch.
[00:11:18] Mark Tully: The other thing is that the initial crop conditions have been a little bit lower than. I think most would’ve expected based on the weather that we’ve had. It’s early. If we get some good weather, that can change pretty quick, but that’s something to keep our eyes peeled on as well in terms of price direction.
[00:11:32] Mark Tully: The other couple things I’d probably highlight as we do a bit of a walk around the world is what’s been happening in Europe today is been drier than expected, and that’s impacting some of the wheat crop in Western Europe and the Black Sea area and why we’ve seen some of that. Increase in wheat prices of late.
[00:11:50] Mark Tully: Just, I think this morning it was Mike that the Ag Minister of Ukraine came out and said, our crop is probably gonna be smaller than what we expected. And his initial comments would suggest that corn harvest in Ukraine might be about 15% smaller than where the USDA is today. And so that’s a little bit of an interesting story that’s developing here in terms of what can happen in Europe from a total harvest and supply perspective.
[00:12:14] Mark Tully: Not to mention, you know, over the last weekend we’ve seen the conflict. Escalate in Europe as well. What’s that gonna mean for weed exports outta that region and, and wheat production as well is something to watch. The last piece, and it’s a tough one to escape these days, is really just trade uncertainty.
[00:12:30] Mark Tully: Lots of things happening when it comes to tariffs and trade flows at the moment, and that’s absolutely been impacting crop prices, foreign exchange. You know, we’ve seen a little bit of a relaxation between US China relations, which I think has been. Good for export opportunity for grains in the us. Even just this week, there’s been some potential hostilities rising there again, there’s been US court decisions that are potentially gonna impact tariffs as well.
[00:12:57] Mark Tully: That’s something we’re gonna have to watch really, really closely here as we move through production in North America and harvest, and what that means for the marketability of the crop as well.
[00:13:06] Mike Howell: Mark. I thought we were gonna get all the way through this podcast without talking about Ukraine, but you had to bring it back in.
[00:13:12] Mike Howell: Seems like we talk about Ukraine every time we do one, but that’s a major factor in everything we’re talking about these days. Mark, we didn’t talk before we started recording about tariffs, but you mentioned tariffs. Is there anything else you wanna talk about? Tariffs. I know that’s something that’s on everybody’s mind, and we’ve spent a little time talking about that in a couple of previous episodes.
[00:13:31] Mark Tully: I think the big thing I just continue to watch with that ultimately is the volatility uncertainty that comes with it, right? We’re just not at a point today where we have certainty. We’re still in some of these. Decision making periods where things can change and they can change rapidly, and I think we just have to be really hyper-focused on keeping our eyes and ears open to news related to that and what the ultimate impact can be.
[00:13:57] Mark Tully: I’d mentioned the NMA. There was some US international trade court decisions that came through that said maybe these tariffs are beyond. What can be allowed, I guess, from the Trump administration at the moment, based on the power that the executive act allowed for, but then an appeals court quickly flipped that decision, and so we’re kind of in a bit of a wait and watch mode.
[00:14:18] Mark Tully: If that judicial process I guess continues, but then. We’ve also been able to see a lot of reductions in tariffs versus initial expectations too that the US Chinese situation relaxed pretty significantly several weeks ago relative to where we were really through the first quarter of this year and early springtime.
[00:14:38] Mark Tully: That’s been a drastic change relative to what expectations were when we were thinking about initial crop expectations back in February and March. I don’t necessarily have. Any concrete answers when it comes to this stuff. It’s just something we’re gonna have to keep our eyes peeled on and go with the flow to some extent and understand how, when changes impact these different rates or policies, what that could ultimately mean for the commodities we deal with in the agricultural sector.
[00:15:04] Mike Howell: Well, mark, we’ve talked about a lot. One thing that we always like to ask you, is there any watch outs, things that growers need to keep an eye out far as we’re moving through this summer, something that may affect what they need to do as far as booking grain or trying to move some of these products?
[00:15:18] Mark Tully: I think the biggest thing at the moment, in this near term period, Mike, is.
[00:15:22] Mark Tully: We’re in the midst of a weather market as we always are. This time of year. There’s some uncertainty still in the North American marketplace. As a result of that, we’ve talked about, you know, some of these mixes from an acreage perspective, potentially shifting where there could be some prevent plant and ultimately where crop condition ratings are gonna.
[00:15:40] Mark Tully: Be, it’s really early in the season. I think everybody’s expecting a pretty sizable crop outta North America today, but that can change a lot by the time we’re in August, depending on how weather plays out. My number one watch out at this time of year for the ag commodity sector is definitely just gonna be this weather during the growing season.
[00:15:58] Mark Tully: And what that. Ultimately means, and we’ve kind of hit on this in detail a little bit over the last couple of questions, but the other piece ultimately is that commodity markets can’t escape geopolitics. What’s happening in Europe today, what’s happening from a trade policy perspective, it’s all gonna potentially have an impact on price and price direction.
[00:16:19] Mark Tully: It’s gonna be important for. Everybody in the industry to keep our eyes peeled on those headlines and just understand what the ultimate impact’s gonna be as it’s a pretty fluid situation today.
[00:16:29] Mike Howell: Well, mark, we really appreciate you taking time to visit with us. We’ve covered a lot of information today. Is there anything else you think you need to mention before we sign off?
[00:16:37] Mark Tully: Boy, I think we’ve covered a lot, Mike. I don’t know if I have any more headlines to touch on from the commodity markets, but certainly wish all our growers out there a healthy and productive season and look forward to chatting again in the near term.
[00:16:50] Mike Howell: Mark once again, we appreciate you joining us today.
[00:16:52] Mike Howell: Listeners, if you will, stick around just a couple of moments and we’ll be right back with segment two. Farming Isn’t farming without questions, and now there’s a place to go for answers. At economics. An entire team of agronomists is waiting and ready to help for free. No question is too big or too small.
[00:17:10] Mike Howell: Visit Nutrien-Ekonomics.com. And submit your question with the Ask an agronomist feature.
[00:17:21] Mike Howell: Listeners, welcome back For segment two, we’ve got Alan Blaylock, senior Agronomist with Nutrien. Back with us for segment two. Today we’re gonna be asking a another question. This time we’re gonna be talking about phosphorus. Alan, what do phosphorus deficiencies look like in a plant and when is the best time to apply phosphorus fertilizers?
[00:17:39] Dr. Alan Blaylock: Like phosphorus deficiencies in the plant usually are most evident in reduced growth, so plants will be a little bit stunted, tend to take on a darker green color, kind of abnormally dark green. In some plants we see like corn, particularly characteristic purpling of the stems. The leaf, mid ribs, things like that.
[00:17:59] Dr. Alan Blaylock: The purline isn’t always manifest. Some varieties don’t show that, but it is something that’s fairly characteristic in corn. But also keeping in mind that some chemicals can cause those same purine symptoms. So it, it’s not a sure sign of phosphorus deficiency, but if we have phosphorus deficiency, most of those corn varieties will show some purpling of the stamps and, but generally reduced growth and a really dark.
[00:18:21] Dr. Alan Blaylock: Abnormally dark green leaf appearance. The best time to apply phosphorus can be applied a couple of times. I generally like to apply phosphorus closer to the time when the crop’s going to knead it, and that’s because of the chemical reactions in the soil. But phosphorus can be applied in the fall. It often is applied in the fall when you can get in the field.
[00:18:40] Dr. Alan Blaylock: If the soil’s. Oftentimes we have drier soils. In the fall, the crop has used a lot of moisture, so it’s a good time to get phosphorus and potassium out in the fall for the next crop. So that’s a good time. But also spring applications are very effective and that shortens the time phosphorus has to react with other.
[00:18:57] Dr. Alan Blaylock: Elements in the soil and precipitate as some insoluble minerals. I tend to prefer spring. Another really great time to apply phosphorus in a starter at planting. Many crops will respond to starters, especially planted early and cool soils. Gives ’em a little bit of early boost. Doesn’t always translate to a yield benefit, but certainly that early growth boost can have a lot of advantages in getting the crop off to a good start.
[00:19:21] Mike Howell: Alan, once again, great information for our listeners. We appreciate you joining us again this week. Listeners. Thanks again for tuning in, and as always, if you have more questions about anything we’ve talked about today, you can visit our website. That’s Nutrien economics with a k.com. Until next time, this has been Mike, how Howell with the Dirt.
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