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  • Fertilizer Prices: What Can We Expect in 2025?

    Fertilizer Prices: What Can We Expect in 2025?

    Over the last few years, producers have been challenged to balance decreasing commodity prices against high input costs. One of the major factors contributing to this challenge has been above-average fertilizer prices. In 2021 and 2022, a combination of increased demand for fertilizer and disruptions to fertilizer production and supply caused prices to double or, in the case of anhydrous ammonia (NH3), triple in a few months (Figure 1), reaching record highs. The good news is that nominal fertilizer prices decreased throughout 2023 and 2024 as these shocks were largely corrected. In the first half of 2023, prices decreased by 20%-40%, depending on the product, from their 2022 highs. Prices largely declined in 2024 until the last quarter of the year. Since then, prices for most fertilizer products have either remained stable or increased.

    Of course, the cost of fertilizer depends not only on the price of fertilizer but also on the price of the commodity the fertilizer is used to grow. It’s much easier for producers to purchase fertilizer when they can sell corn for $7/bushel, as opposed to $4/bushel, regardless of the nominal fertilizer price. Figures 2 and 3 illustrate the price of urea relative to corn and cotton prices for the years 2020-2024. Fertilizer prices used to calculate these ratios come from DTN Progressive Farmer’s weekly average fertilizer price updates. Cotton and corn prices use the weekly closing price for the nearby December contract as reported in Texas A&M AgriLife Extension Economics Basis Data and by Barchart.com.  

    Figure 2 illustrates the total bushels of corn required to purchase one ton of urea in each month of the series. Figure 3 shows the total pounds of cotton lint required to purchase one ton of urea each month. From January 2020 until August 2021, producers needed an average of 98.02 bushels of corn or 577.80 pounds of cotton lint to purchase 1 ton of urea. From September 2021 through December 2022, when fertilizer prices reached their highest levels, one ton of urea cost an average of 135.72 bushels of corn or 836.61 pounds of cotton lint. From January 2023 through December 2024, as fertilizer prices fell, one ton of urea was worth 117.40 bushels of corn or 719.26 pounds of cotton lint on average.  

    Now, what about relative fertilizer prices in 2025? For the week of January 13-17, DTN Progressive Farmer reported an average price of $492/ton of urea. During that same week, the average price for the Dec ’25 corn contract was $4.56/bushel, and the average price for the Dec ’25 cotton contract was $0.69/pound, according to Barchart.com. This gives us a urea-corn price ratio of 107.92 bushels/ton and a urea-cotton ratio of 711.25 pounds/ton. To put these values into perspective, this urea-corn ratio is similar to the June 2020 ratio and about 0.83 bushels/ton less than in January 2024.  The urea-cotton ratio, on the other hand, is about 52.32 pounds/ton higher than in January 2024, and similar to June and July of last year.  

    Currently, fertilizer is slightly cheaper relative to corn prices and slightly more expensive relative to cotton prices when compared to a year ago.  Looking forward, nominal fertilizer prices have been mostly stable since July of last year.  Should this trend continue, changes in relative fertilizer prices this year will depend on how farm commodity prices change. 

    Figure 1.  Weekly Retail Prices for Selected Fertilizer Products, 2020-2024

    Figure 2. Monthly Urea-Corn Price Ratio, 2020-2024

    Figure 3. Monthly Urea-Cotton Price Ratio, 2020-2024

    Sources:

    Corn Historical Prices.  Barchart.com, https://www.barchart.com/futures/quotes/ZCZ25/historical-prices?orderBy=contractExpirationDate&orderDir=asc

    Cotton #2 Historical Prices. Barchart.com, https://www.barchart.com/futures/quotes/CTZ25/historical-prices?orderBy=contractExpirationDate&orderDir=asc

    DTN Retail Fertilizer Trends.  DTN Progressive Farmer, https://www.dtnpf.com/agriculture/web/ag/crops

    Texas A&M AgriLife Extension Agricultural Economics Basis Data, https://agecoext.tamu.edu/resources/basis-project/basis-data


    Wright, Andrew. “Fertilizer Prices: What Can We Expect in 2025?Southern Ag Today 5(6.1). February 3, 2025. Permalink

  • Evaluating the Cooperative Manager

    Evaluating the Cooperative Manager

    The annual evaluation of the general manager is a clear duty of a cooperative board of directors. It’s a very important task. An evaluation of the general manager is an opportunity to revisit the direction and performance of the cooperative. When done correctly, the evaluation process will strengthen ties between board and manager and align management with board objectives. Here are three recommendations for improving the manager evaluations at your cooperative.

    1. Evaluate What Matters Most

    One challenge of manager evaluation is that potentially, there is a lot to evaluate. Further, some of the manager’s duties might be hard to evaluate or observe. If you choose criteria based on the functions of management, you might develop a list like this:

    Planning

    • Actively and accurately assesses competitive forces
    • Makes timely adjustments to the changing business environment
    • Helps to craft a successful strategic approach
    • Develops and implements effective timelines and goals
    • Budgets for current and future operating needs
    • Ensures cooperative resources are available and ready for customer use

    Organizing

    • Effectively hires and trains high-quality employees
    • Assigns resources to their best use
    • Delegates managerial duties effectively
    • Plans and accommodates organizational growth

    Leading

    • Motivates employees toward excellence
    • Cultivates board relations
    • Communicates with members
    • Promotes the company vision
    • Mentors and grooms future managers

    Controlling

    • Reports financial results in a clear and timely manner
    • Monitors cooperative performance
    • Appropriately adjusts budgets throughout the year
    • Makes staffing changes when needed
    • Conducts employee evaluations and gathers employee feedback

    Further, you can consider the manners in which the manager conducts their self. The manager’s personal skills, attributes, and competencies might also be important. Additional criteria might include the following:

    Interpersonal

    • Communication Skills
    • Listening
    • Empathy
    • Emotional Intelligence
    • Working with Others
    • LeadershipMentoring
    • Friendliness
    • Technical
    • Industrial Knowledge 
    • Marketing
    • Equipment Operations
    • Software Knowledge

    Conceptual

    • Abstract Thinking
    • Problem Solving
    • Adaptability
    • Analysis
    • Diagnosing Problems
    • Forecasting and Predictions
    • Decision-making

    One solution to organizing all these potential criteria is to consider the stewardships of the manager. Every cooperative manager has responsibilities toward the operations of the cooperative, the board, and the members. To help further, consider if your evaluation criteria are focused on the mission of the cooperative. In doing this, better questions begin to emerge:

    Cooperative

    1. Recruits, trains, and retains quality employees. 
    2. Maintains and protects the functionality of cooperative assets.
    3. Demonstrates result-driven use of cooperative funds.
    4. Focuses on cooperative mission.

    Board

    1. Provides frequent and thorough reports of cooperative financial condition.
    2. Communicates market opportunities and risks in a timely manner.
    3. Interprets market conditions affecting financial performance.
    4. Informs board of potential legal threats and conflicts of interest.

    Members

    1. Actively recruits new membership.
    2. Is knowledgeable of individual members and seeks their input.
    3. Promotes the mission of the cooperative to members.
    4. Is focused on customer service.

    2. Include Professional Development

    Don’t forget that the manager is also a valuable asset to the cooperative. Your evaluation might include goals for self-improvement of leadership skills or industry knowledge.  The manager might self identify some of these goals as well as other relevant criteria for the cooperative, board, and members. Questions might include:

    Manager

    1. Mentors employees for future leadership.
    2. Exemplifies integrity for the cooperative.
    3. Listens to member-owner concerns.
    4. Analyzes cooperative performance and suggests needed corrections.

    3. Give Evaluation the Time it Deserves

    Successful manager evaluation is not an annual event – it is a year-long process. When your board approach to manager evaluation is to invite the manager in to award a bonus, or take them to lunch, or any other solitary event, you are failing to protect the cooperative. Proper evaluation starts immediately following the prior evaluation by establishing the evaluation criteria for the coming year. This is to be agreed upon by board and manager. Monthly board meetings should take time to revisit and assess the evaluation, noting evidence of performance. Executive sessions are useful times to briefly discuss management performance and discuss any needed adjustments to evaluation criteria, or management actions. At the end of the year, the board chair can ask for an evaluation from each board member and the manager.  Doing this will help to elevate the annual evaluation to a constructive process for both cooperative and manager. 


    Park, John. “Evaluating the Cooperative Manager.Southern Ag Today 5(5.5). January 31, 2025. Permalink

  • Why the Current Economic Downturn is So Troublesome

    Why the Current Economic Downturn is So Troublesome

    The current outlook for the major row crops in the U.S. is pretty dismal.  The Agricultural and Food Policy Center (AFPC) at Texas A&M University has been working with farmers across the country since 1983 to develop representative farms in major production regions.  Currently, AFPC maintains the data to analyze 92 crop (64) and livestock (28) operations in 30 states (Figure 1). From the beginning, the representative farms have been utilized to conduct “what if” policy analyses for the House and Senate agricultural committees to help craft agricultural legislation.  Another use of the farms is to provide policymakers with an early warning system or agricultural barometer under current policy conditions.  AFPC has partnered with and uses price projections from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri to project the financial wellbeing of the representative farms.

    In the 42 years that AFPC has been projecting farm financial performance, the most recent crop outlook for the representative farms is the worst in terms of the number of farms in each of the four commodity types (feed grains, cotton, rice and wheat) that are not currently expected to have a positive cash flow over the next 5 years.  What makes this so troublesome is there is not a crop that producers can switch to from their current crops that would generate a positive return.  In other downturns, we would see producers that can grow several types of crops taking market signals and moving to more profitable crops.  Part of developing representative farms is collecting all of the cost information for the farms.  This makes it possible to develop cost of production data for each of the crops being produced on the 64 representative crop farms.  The bottom line is very few of the representative farms appear to have profitable crops on them at prices that are projected by FAPRI for the 2025/26 marketing year – which is very troublesome.  While the economic and natural disaster assistance provided in the recent American Relief Act of 2025 will help in the near term, the need for a significant enhancement to the farm safety net over the next 5 years is imperative… and the sooner the better.

    Figure 1.  AFPC Representative Crop and Livestock Farms.


    Outlaw, Joe L., and Bart L. Fischer. “Why the Current Economic Downturn is So Troublesome.Southern Ag Today 5(5.4). January 30, 2025. Permalink

  • Flat Global Demand and Increased Brazil Production Provide Challenges for U.S. Cotton Prices

    Flat Global Demand and Increased Brazil Production Provide Challenges for U.S. Cotton Prices

    Cotton futures prices have struggled to gain traction over the past six months. The last time nearby cotton futures were above 75 cents was June 28, 2024. Since July, nearby cotton futures prices have traded mostly between 66 and 73 cents. New crop (December 2025) futures prices are currently below 70 cents, which will not provide attractive pricing opportunities for cotton producers. Additionally, if new crop futures prices remain low through the crop insurance price determination period, the safety net will be diminished and will likely result in decreased planted acres in the United States. Global supply and demand have played a role in low cotton prices. Figures 1 and 2 show global cotton demand and Brazil cotton production which have contributed to lower cotton prices. 

    Global cotton demand has been flat for more than two decades and per capita cotton consumption has trended lower (Figure 1). Projected global cotton consumption for the 2024/25 marketing year is 116 million 480 lb bales, the same as 2010/2011. Competition with synthetic fibers has resulted in a lower market share for cotton and reduced demand. Improved demand will be essential if cotton prices are to improve. 

    Compounding the challenges for U.S. cotton producers has been the rise of Brazil. In the last ten years, Brazil has more than doubled cotton production from 7.18 million 480 lb bales to 16.9 million 480 lb bales (Figure 2). The rise of Brazil cotton production has provided substantial competition for export markets. The combination of increased cotton production and flat global demand will continue to weigh on global cotton prices. 

    Figure 1. Global Cotton Consumption and Per Capita Consumption, 2000/01-2024/25

    Figure 2. Brazil Cotton Production, 2000/01-2024/25

    References

    USDA Foreign Agricultural Service (FAS), Production Supply and Distribution. Accessed at:https://apps.fas.usda.gov/psdonline/app/index.html#/app/home

    Barchart.com. Nearby Cotton Futures Contract. Accessed at: https://www.barchart.com/futures/quotes/CTH25/interactive-chart


    Smith, Aaron. “Flat Global Demand and Increased Brazil Production Provide Challenges for U.S. Cotton Prices.Southern Ag Today 5(5.3). January 29, 2025. Permalink

  • Placements Lower Than Expected in January Cattle-On-Feed Report

    Placements Lower Than Expected in January Cattle-On-Feed Report

    The January Cattle on Feed report was released on Friday afternoon. Total on-feed inventory to start the year was estimated at a little over 11.8 million head, which is down by just under 1% from January of 2024. Even though feeder cattle supplies have been lower, feedlot inventories ran above year-ago levels for eight of twelve months in 2024 as lower feed prices encouraged longer feeding times. While I don’t want to read too much into it, this was the largest year-over-year decline since May.

    Placements were once again the headliner of the report as they came in below, and outside the range of pre-report estimates. December 2024 placements were estimated at 1.64 million, which was 3.3% below December 2023. On the surface, this seemed logical as December represented a full month of not receiving live cattle imports from Mexico. This also marked the second month in a row with placement levels being more than 3% below year-ago.

    Friday’s report was also a quarterly cattle-on-feed report, which means it included an estimate of the steer/heifer breakdown. In the absence of a July cattle inventory report, this has been one of the main indicators economists have been tracking for evidence of heifer retention. Heifers accounted for 38.7% of the total on-feed inventory on January 1, 2025. While this doesn’t speak to retention, it is worth noting that this is about 1% lower than last January and 1% lower than October 2024. So, it does bear watching as we move further into 2025. Again, I think imports from Mexico had some impact here as heifers had represented a higher than usual share of imports prior to the ban in late November.

    Last week’s cattle on feed report will be overshadowed later this week as USDA-NASS will release their annual inventory estimates on the afternoon of January 31st. While beef cow slaughter was down sharply for 2024, most are still expecting continued decreases in beef cattle numbers at the national level. It will be interesting to see the state-by-state numbers and specifically to look at areas where heifer retention may have already begun. Given the favorable price outlook for calves, I think heifer retention is very possible in 2025 if weather is cooperative. But I also think this will be a relatively slow cow-herd expansion once retention does begin.


    Burdine, Kenny. “Placements Lower Than Expected in January Cattle-On-Feed Report.Southern Ag Today 5(5.2). January 28, 2025. Permalink