The rising cost of nitrogen fertilizers is caused by production challenges, tight global supplies, rising natural gas costs and steady demand, the bank said.
The report also suggests that while U.S. soybean acres will rise nominally compared to 2021 as a result of higher fertilizer prices, the total volume of soybean acres will not exceed corn acres in 2022.
“The sharp rise in fertilizer prices has fueled speculation about a major acreage shift away from corn,” said Kenneth Scott Zuckerberg, lead grain and farm supply economist with CoBank. “We don’t see that happening in 2022. The current price ratio of soybeans to corn shows that soybean prices remain weak compared to corn.
Demand from ethanol producers is expected to remain strong given the current high fuel prices and record blending margins.”
Larger acreage shifts from corn to soybeans are likely in the longer term, however, as production of biofuels such as renewable diesel lean more towards soybeans and away from corn, Zuckerberg said.
The benchmark Green Markets North American Fertilizer Index has risen by 265 per cent since May, 2020, and there is little reason to expect it to reverse any time soon, the bank said.
