Minding Ag's Business

Cheap and abundant supplies of homegrown natural gas could make the U.S. a powerhouse in N fertilizer production again, DTN's Russ Quinn reported as part of our fertilizer outlook last week (subscribers see the Farm Business page). The story of this great reversal of fortune is worth emphasizing and will be a topic of conversation when CHS Inc.'s CEO Carl Casale addresses the DTN-Progressive Farmer Ag Summit in Chicago Dec. 10. Afterall, CHS's plans to spend perhaps $1.6 billion to build an anhydrous plant in North Dakota is the cooperative's largest single investment in anything in its 80-year history. It's the biggest single investment in North Dakota, even with all that oil drilling. CF Industries, Potash Corp., as well as Egyptian and Indian concerns are also sinking more than $5 billion into new capacity and greenfield plants. Dull old fertilizer is suddenly a big deal, in other words.

North America's access to phosphates (thank you Florida) and potash (thank you Canada) free our farmers from the fear of prolonged supply shortages. But in a pre-Summit interview a few weeks ago, Casale told us he never understood why the U.S. wasn't more concerned about the need to import more than 50% of its nitrogen fertilizer. Anyone old enough to remember the Arab Oil embargo and resulting gas lines in the 1970s knows this could be a national security issue under the right circumstances.

Quinn reports that Glen Buckley, chief economist with NPK Fertilizer Advisory Service, notes the U.S. capacity of N fertilizers would balloon--IF all the announced plants and expansion projects are eventually built. He pegs new capacity as 69% of our annual ammonia use, 107% of urea use and 53% of UAN use.

Whether this is a glut or an opportunity for the U.S. to manufacture and export products again depends on your point of view. Casale thinks home-grown supplies will displace foreign imports of N fertilizer. "That's a good thing," he says. But there's room for everybody who is talking about building capacity, he adds. "It's a big world and a big country"--and with growing world populations, fertilizer is a growth industry.

For the agenda and speaker lineup at the Ag Summit, go to www.dtnagsummit.com. We hope to see you there!

Marcia Taylor can be reached at marcia.taylor@telventdtn.com

Follow Marcia Taylor on Twitter@MarciaZTaylor.

(AG/SK)

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