2014 Southeast Hay Convention

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1 Fertilization Outlook for Hay Producers Over the next few minutes Projected Production Costs The False Economy of Shortcuts Fertilizer Value of Different Forage Crops Extension Forage Specialist Crop and Soil Sciences UGA Fertilizer Industry Trends - Supply/Demand - Changes in Capacity - Imports and Consolidation - Price stability/decline? $3 $1 Bermudagrass Hay Production Breakdown of Projected Costs per Acre $ (e) (d) (f) (c) $7 $1 (g) (a) Fertilizer (b) Fuel and Maintenance (c) Pesticides (d) Interest on Var. Costs (e) Labor $ (f) Fixed & Mgmt Costs (g) Lime (b) $87 (a) $5/acre or $19/ton The False Economy of Shortcuts Yield Cost of Production Forage Cost ($/lb) = Total Cost ($/Acre) Forage Yield (lbs/acre) (t/ac) $5 $5 $587 $5 $717 $78 7% 8% 9% 1% 11% 1% $/ton of DM $57 $5 $73 $8 $9 $98 7 $5 $75 $8 $93 $1 $11 $7 $87 $98 $19 $1 $13 5 $91 $ $117 $13 $3 $15 $1 $13 $7 $13 $179 $19 3 $15 $17 $19 $17 $39 $1 1

2 Soil Test and Follow Fertility Recommendations Annual Nutrient Removal by the Primary Hay Crops in the South Nutrients Removed (lbs of Nutrient/Acre/Year) Alfalfa Bermudagrass Orchardgrass Perennial Peanut Tall Fescue Sample hayfields every year and 1/3 of your pastures each year. 5 Nitrogen Phosphate Potash Calcium Mag Adapted from Southern Forages, 7 and Myer et al, 1. Tracking Fertilizer Value in Your Hay has Also Never Been More Important Value of Fertilizer (N, P O 5, or K O) per Ton of DM $9. $8. $7. $. $5. $. $3. $. $1. $. Alfalfa Bermudagrass Corn silage Fescue Orchardgrass Peanut Price ($/lb of N, P O 5, or K O) Fertilizer Prices Urea 5-% nitrogen Diammonium phosphate (18--), figured for P value only Potassium chloride (%) Source: USDA-ERS, Jan. with industry forecasts Price ($/lb of N, P O 5, or K O) Fertilizer Prices: A New Plateau? Urea 5-% nitrogen Diammonium phosphate (18--), figured for P value only Potassium chloride (%) Source: USDA-ERS, Jan. with industry forecasts

3 1% 3% 5% % 11% (% of Total NPK Demand) Total NPK Use in the U.S. Demand is Driven by Corn 7% Corn Wheat Soybean Cotton High Value Crops Other Source: Glen Buckley, NPK Fertilizer & Advisory Service, Nov. 11. Million tons World N Supply/Demand Balance 1 Demand Capacity Source: UN FAO, 1. Current world fertilizer trends and outlook to % +5.5% Tons of Product N Fertilizer Products Sold in the U.S. Actual Product,, 1,, 1,, 8,,,,,,,, - Anh. Amm. Amm. Nit. N Solns Urea Source: USDA Economic Research Service ( N Fertilizer Products Sold in the U.S. Actual N Applied Tons of Actual N 5,, Anh. Amm.,5, Amm. Nit.,, N Solns. Urea 3,5, 3,,,5,,, 1,5, 1,, 5, Million tons of Nitrogen U.S. N Use is Dependent Upon Imports Import Domestic % 5.8% (% of Total Urea Imports) Urea Imports by Country 1% 7% % 35% Middle East Canada China 11% Egypt Trinidad Other 8% Source: Glen Buckley, NPK Fertilizer & Advisory Service, Nov

4 U.S. UAN 3% Prices (FOB Gulf Barge - $/ton) Urea Prices (Black Sea Urea Prices) Source: Bryce Knorr, FarmFutures.com ( Source: Bryce Knorr, FarmFutures.com ( U.S. Petroleum and Other Liquid Fuels Supply U.S. Energy Production by Fuel Adapted from U.S. Energy Information Administration's Annual Energy Outlook Adapted from U.S. Energy Information Administration's Annual Energy Outlook U.S. Electricity Generation (Billion kilowatthours) U.S. Natural Gas Imports and Exports (trillion cubic feet) Adapted from U.S. Energy Information Administration's Annual Energy Outlook Adapted from U.S. Energy Information Administration's Annual Energy Outlook

5 Phosphorus Supply U.S. P Use and Exports Phosphorus over short term appears stable - 5%+ increase in imports in 1 & Morocco has % of world s supply of P Long term supply is questioned. - US has 19% of world s supply of P - 5% of that comes from one area (Tampa) - Cons. estimates are that this resource will last less than 3 yrs. Export Domestic 1 Million tons of Nitrogen Price of MAP/DAP may be suppressed by inc. imports from Morocco & Russia. 1 8.% 31.% U.S. DAP Price Forecast World P Supply/Demand Balance 55. Demand 5. Capacity (FOB Tampa - $/metric ton) +1.5% Million tons % Source: UN FAO, 1. Current world fertilizer trends and outlook to 1. Source: Bryce Knorr, FarmFutures.com ( World K Supply/Demand Balance Demand Capacity U.S. K Use and Imports % Million tons % % 78.% Domestic 1 3. Source: UN FAO, 1. Current world fertilizer trends and outlook to 1. Import 8 Million tons of Nitrogen

6 3,75 5,58 5,797 1,85 5,895 (Million Metric Tons) Potash Supply by Country/Region 1,117 1,918 18,55 Source: Glen Buckley, NPK Fertilizer & Advisory Service, Nov. 11. Canada East Europe Western Europe China Middle East Latin America USA Other World Potash Capacity by Country/Company Volume % of Total (1 metric tons of K O) Canada PCS 3 13% Mosaic 55 13% } Canpotex Agrium 3% Russia Uralkali 35 7% Silvinit 373 8% } combined Belarus Belaruskali 55 11% Germany Kali & Salz 5 9% Israel ICL Fertilizers 3 7% Jordan Arab Potash 5 3% Major Producers 3,131 73% Others 13, 7% Total 9,197 Industry has become highly consolidated. Source: Glen Buckley, NPK Fertilizer & Advisory Service, Nov. 11. U.S. Potash Price Forecast (FOB Midwest Wholesale - $/ton) Summary Soil fertility is an investment. You get out of it what you put into it. Fertilizer prices in appear to be stabilizing Increasing capacity/supply in near term may even temper prices. Source: Bryce Knorr, FarmFutures.com ( Long-term prospects appear positive U.S. Energy policy and LNG exploration? P supply is dwindling Industry consolidation and political upheaval? Resources Questions? USDA Economic Research Service ( FertilizerUse/).