Articles > Times Are Tough, We Are Tougher

Times Are Tough, We Are Tougher

Nov 09, 2021

Times are tough. Together, we are tougher. 
The Covid-19 pandemic along with a bullish global energy market have triggered an entirely new crisis that is being felt by the agriculture industry. Throughout the past year, all facets of UFC have felt the effects of this, and the agronomy division is no exception. As your partner in agriculture, it is our job to provide you with the best products and services for your operation at a competitive price. It is also our responsibility to educate our patrons on the volatile markets and be forthcoming with our anticipations for future markets and trends. By equipping you with information, tools and resources we will help you navigate the unknowns and best prepare your operation for the future. 
Fall harvest is still underway, however, it is never too soon to begin planning and preparing for spring 2022. There are many factors that are fueling the new crisis. Here is what you need to know: 
  • First, the spread of prosperity is growing globally which has increased demand for commodities from countries such as Brazil, India, Japan and China. 
  • Hurricane Ida made landfall at 11:55 AM on Sunday, August 30, 2021. Nearly two months later, the negative ripple effects of the hurricane are still being felt. In fact, Hurricane Ida caused more damage to infrastructure along the lower Mississippi River region than the superstorm Hurricane Katrina. Ida took one of the world’s largest fertilizer and chemical plants offline, creating a major kink within the already struggling logistics and the supply chain. Specifically, glyphosate supply is extremely tight. As a result, all retailers have been put on allocation and pricing has increased. The agronomy team is continuing to look for alternative sources. 
  • Ida also disrupted grain and soybean shipments from the Gulf Coast, which accounts for about 60% of U.S. exports, at a time global crop supplies are tight and demand from other countries is strong (reference first bullet point). 
  • Trade and logistic delays caused by the Covid-19 pandemic are battering an already struggling agriculture supply chain. Glysphosate and Glufosinate supply remains tight, along with many other CPP products and we will continue to see these issues through spring of 2022. Because of the limited supply, multiple products will be on allocation. 
  • Urea prices are skyrocketing largely due to the plant Hurricane Ida knocked offline this past August. In addition, the price of natural gas, which is a significant cost component of nitrogen production, is skyrocketing globally which is driving the overall cost increase. The whole nitrogen complex has followed. 
  • Earlier in the year, China banned the export of all phosphate products until, at minimum, June of next year. While the U.S. doesn’t buy a lot of phosphate from China, the country does represent 30% of world trade. Meaning, China’s regular buyers will be looking elsewhere. All phosphate products will continue to be priced at levels none of us are comfortable with. 
  • Last, we expect potash supply will start to improve sometime in the first quarter for 2022. Unfortunately, these improvements will take some time to make their way to UFC territory and therefore won’t be realized by spring.
This isn’t the first crisis we have been through, and it won’t be the last. In the end, we will look back on these challenging times having gained new experiences and learned new information. Please stay in close contact with your UFC salesperson and support staff. Being proactive on needs for the next crop is important. The more time we have to work together, the better the chance is UFC can supply those needs as timely and as cost effectively as possible. Together, UFC and our patrons will come out more resilient and better off having access to new, additional resources and industry partners. Times are tough. Together, we are tougher. 

JIM CARLSON 
VICE PRESIDENT OF AGRONOMY 
 


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