Friday’s Insider: Fertilizer affordability — February’s disappointment

Corn and wheat prices have declined recently due to escalating trade tensions and retaliatory tariffs impacting U.S. agricultural exports. In response to President Trump’s announcement of increased duties on imports from Canada, Mexico, and China, these countries imposed tariffs on key U.S. exports, including corn, soybeans, and wheat. China, for instance, implemented a 10% tariff on U.S. soybeans and a 15% tariff on wheat and corn. These measures have raised concerns about reduced demand for U.S. agricultural products, leading to price declines. Specifically, wheat prices have slumped by more than 17% over a three-week period, and corn prices have fallen by 9%.

While urea prices are more or less stable, having climbed high enough as the season in the Northern Hemisphere slowly rolls into application, phosphate prices are literally on fire. Moroccan OCP has reported technical problems with DAP production, which, coupled with forthcoming demand and consistent Indian purchasing interest, has led to a new spike in phosphate prices.

Key inputs: February 2025 vs. January 2025

Here’s how the numbers compare:

• Corn Price: $4.75 per bushel (down from $4.99 in January)
• Wheat Price: $5.65 per bushel (down from $5.78 in January) and down from its peak value of $6.33 per bushel on Feb 18, 2025
• Urea FOB NOLA: $385 per short tonne (down from $390 in January)
• DAP FOB NOLA: $618 per short tonne (up from $588 in January)

As always, let’s dive into the affordability ratios and their implications.

Affordability ratios across 2024-2025

Affordability is calculated as the ratio of crop prices to fertilizer prices, providing a clearer understanding of the cost burden on producers.

Urea Affordability

• Corn Producers:
  • June: 0.0146
  • July: 0.0145
  • August: 0.0141
  • September: 0.0138
  • October: 0.0141
  • November: 0.0141
  • December: 0.0138
  • January: 0.01279
  • February: 0.01234

Analysis: Affordability for corn producers has declined for the fourth consecutive month, bringing it to the lowest level since I started following it in June 2024.

• Wheat Producers:
  • June: 0.0177
  • July: 0.0176
  • August: 0.0173
  • September: 0.0171
  • October: 0.0171
  • November: 0.0179
  • December: 0.0166
  • January: 0.01486
  • February: 0.01468

Analysis: Why it slightly improved against January numbers, affordability is still relatively low comparing to 2024 numbers

DAP affordability

• Corn Producers:
  • June: 0.0079
  • July: 0.0078
  • August: 0.0076
  • September: 0.0073
  • October: 0.0073
  • November: 0.0073
  • December: 0.0072
  • January: 0.0085
  • February: 0.0077

Analysis: After the some impovement of DAP affordability in January 2025, it’s back down to 2024 levels.

• Wheat Producers:
• • June: 0.0098
  • July: 0.0097
  • August: 0.0095
  • September: 0.0093
  • October: 0.0093
  • November: 0.0096
  • December: 0.0095
  • January: 0.0098
  • February: 0.0091

Analysis: Again, the index is down comparing to January 2025

Comparison to December

1. Urea:
   • Corn producers: Affordability dipped by 3.5% in February 2025
   • Wheat producers: Affordability declined by almost 1.2% during the same month
2. DAP:
   • Corn producers: A major decline of 9.5% comparing to January 2025
   • Wheat producers: Affordability dropped by 7.1%

Analysis of trends

Urea: While urea prices are more or less stable, having climbed high enough as the season in the Northern Hemisphere slowly rolls into application, phosphate prices are literally on fire.

Moroccan OCP has reported technical problems with DAP production, which, coupled with forthcoming demand and consistent Indian purchasing interest, has led to a new spike in phosphate prices.

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About the Author of “Friday’s Insider”: Ilya Motorygin is the co-founder of GG-Trading and brings 30 years of experience to the fertilizer industry. Renowned for his comprehensive problem-solving skills, Ilya expertly manages deals from inception to completion, overseeing aspects such as financing, supply chains, and logistics.