Ep. 4 Comparing Historical Fertilizer Prices in Arkansas to Crop Futures Prices

00;00;07;07 – 00;00;25;07
Dr. Hunter Biram
Now, the week was great. we had our national association meeting in New Orleans, and it was steamy hot, and it stank, but it was a great conference. You know, it was a good venue. The hotels. Great. great people. but, New Orleans in summertime is about what you would imagine the worst.

00;00;25;08 – 00;00;28;24
Riley Smith
Extremely hot and probably extremely humid.

00;00;28;26 – 00;00;35;00
Dr. Hunter Biram
yes. Even more so than Arkansas. And I feel like that’s a lot coming from an Arkansas boy to say it was really human there.

00;00;35;02 – 00;00;47;26
Riley Smith
Well with that. Good morning. Good morning everyone. This is another episode of Morning Coffee Night Markets with your host me, Riley Smith. And beside me, I got doctor Hunter Byram today. How are you?

00;00;47;28 – 00;00;50;13
Dr. Hunter Biram
Howdy, howdy. I’m doing great, man. How are you?

00;00;50;13 – 00;00;52;08
Riley Smith
I’m doing fantastic.

00;00;52;09 – 00;00;52;27
Dr. Hunter Biram
Just dandy.

00;00;53;04 – 00;00;57;07
Riley Smith
Yeah. Couldn’t be any better. If I was doing any better, I had to take medicine for it.

00;00;57;11 – 00;01;01;19
Dr. Hunter Biram
Well, good deal, because medicine prices are expensive.

00;01;01;22 – 00;01;24;19
Riley Smith
Just like everything else. And just like what we’re going to talk about today. So today we’re going to talk about the historical prices of fertilizers. slash inputs compared to the crop prices, received in the past. And, I think we included 2024 didn’t we, or. No, we.

00;01;24;19 – 00;01;29;21
Dr. Hunter Biram
Started looking at it. but because prices aren’t finalized, I think we’re just going to see, what, 2023 for right now.

00;01;29;23 – 00;01;53;02
Riley Smith
Well, so we’re going to get into the meat and potatoes of this thing, but we’re going to talk about, kind of where this data come from. So when I first started here back in May, doctor Hunter Byrum had me going through, some crop enterprise budgets at the University of Arkansas Division of AG. Does. Was that we, I took it, take it, took it, took it, and.

00;01;53;05 – 00;01;53;21
Dr. Hunter Biram
You took it.

00;01;53;26 – 00;02;18;26
Riley Smith
I took it and, ran with it. And what I did was, is I separated out the operating expenses, that being inputs, fertilizer, seed cost, diesel fuel, lube, pre post-harvest expenses, stuff like that. And with that, we, we made this big Excel sheet, this is captures from 2010 all the way up to current year.

00;02;18;26 – 00;02;48;08
Riley Smith
So, we use 2023. but we just now, I think 2024 just got released, so we need to go in there and put them in. But we did for this, for this podcast, we did pull the fertilizer, prices, for this particular analysis that we did. So we’re hoping, we should have that. I would like for the, newsletters, for this newsletter particularly, I want to put a link in there.

00;02;48;08 – 00;03;11;18
Riley Smith
So whoever if you’re listening to this podcast, by the way, please go subscribe to our newsletter. try to get that. That’ll help you follow along. with the podcast as well. But we will try to get a link in there so you can, be able to go to that set of data, the, fertilizer prices we, put them in a line graph, and these fertilizer process just these are mainly just looking at the macro.

00;03;11;18 – 00;03;35;03
Riley Smith
So that being N-P-K, you know, nitrogen, phosphorus, potassium for those who don’t know what the acronyms mean, maybe, maybe that took chemistry in high school should know those. But it’s, with that way. So your, nitrogen is going to be urea, potassium or your, phosphate I believe is DAP. Right. And then you have a potash.

00;03;35;06 – 00;03;55;23
Riley Smith
so we took those. We compared the what? The fertilizer. We looked at the price per unit. So that being price per pound of unit, just kind of to see what the trend was from 2010 to now. with that, we found that,

00;03;55;25 – 00;04;18;11
Riley Smith
Everything stayed pretty close together as far as the peaks and the falls with it. however, we did see that potassium. I mean, it dropped quite a it’s quite a bit lower, below nitrogen and phosphorus. but as it goes down towards 2019, you can see it and you can see this in the newsletter as well.

00;04;18;11 – 00;04;44;28
Riley Smith
These graphs that we’re, we’re looking at currently and talking about and it’ll help explain some of this, but we can also see the transit, what took place in what year. So like, for example, in February 2022, the Ukraine war, how it had an effect on the, fertilizer price. I know that year in particular, you urea got, absolutely.

00;04;45;01 – 00;04;46;28
Riley Smith
high as a tree.

00;04;47;00 – 00;05;06;12
Dr. Hunter Biram
Yeah. Everything was pretty close in 2022. I mean, if you’re looking at this historical graph, I mean, really, the price high that we have in our historical data center around 2012, actually, that’s when we saw that that high, at least in the past, you know, since 2010, then we saw prices pretty much decrease, all the way up to 2021.

00;05;06;12 – 00;05;26;07
Dr. Hunter Biram
But then what happened in February 2022? You know, Russian Russia invaded Ukraine. And we all know what happened when they put prices then. And, ever since then, we really haven’t seen much relief. We’ve seen a little bit of relief, but not a whole lot. in particular, it looks like nitrogen has fallen since since then. but phosphorus and, potassium, not so much.

00;05;26;09 – 00;05;33;03
Riley Smith
You know what I found interesting? Do you know what happened in 20-22, I mean 2012?

00;05;33;06 – 00;05;35;24
Dr. Hunter Biram
That’s right. I’m sure a lot of things did, but. But what are you thinking about?

00;05;35;25 – 00;05;57;14
Riley Smith
I just remember it because I won two saddles at that summer. Wow. And that summer, rodeo at, anybody in the state, if you know where Mount Vernon, Arkansas is in the flying L rodeo. So that particular summer, they used to have a rodeo every Saturday. And I went to nearly all of them, made finals won two saddle that year.

00;05;57;14 – 00;06;09;09
Riley Smith
But that summer. But I just remember this distinctly. They put on a shirt that said Beat the Heat on the Hill. And that was because we had extreme drought that year.

00;06;09;11 – 00;06;11;06
Dr. Hunter Biram
That’s right, that’s right.

00;06;11;06 – 00;06;33;06
Riley Smith
And that’s when we had record breaking highs since I believe 1980. It was extremely dry. Yeah. It was very hot and dry. but anyway that being a side note. So Doctor Biram we’ve got him here. I mean we’re doing a collab on this because we took this fertilizer data and we were like, well what can we do with it?

00;06;33;06 – 00;06;56;08
Riley Smith
And I mean, listen, there’s a thousand different ways to skin this cat because, it’s a lot of data. I’m talking about 17,000 lines in Excel of data. And so we were trying to be very broad, but very specific at the same time, trying to find something that we could pull from this for the moment and run with it.

00;06;56;08 – 00;07;02;07
Riley Smith
And I think we did. And do you want to talk about kind of where we were, where we’re at with the fertilizer in the, in the crop price?

00;07;02;07 – 00;07;22;15
Dr. Hunter Biram
Yeah. So I mean, as many of you know and are aware of, crop prices are not good and, they are very low is what I mean. And they’re relatively low, you know, to be more, more specific. They’re, they’re relatively low. so in looking at these, fertilizer prices, I was thinking, okay, well, I mean, yeah, the fertilizer price standing alone looks like it’s fallen.

00;07;22;17 – 00;07;41;09
Dr. Hunter Biram
but we also know that crop prices have, varied. And in recent, you know, in this year, at least, they’re they’ve gotten pretty low. So what what we set out to do then is say, okay, well, in the context of, crop prices, how do these input prices fare like, you know, is it a low input price or at the high input price?

00;07;41;09 – 00;07;58;11
Dr. Hunter Biram
And so, what we do is we just take a take a ratio, and all that means is it’s a fraction. So we’re going to take a, we’re going to take a fraction of the crop price. And this will be the crop, futures price at harvest. for all my nerds out there, it’s actually the RMA harvest time price used for revenue protection.

00;07;58;11 – 00;08;23;06
Dr. Hunter Biram
So to be specific, we take that harvest futures price and we divide it by the, Arkansas input price that, that, that we have just looking at macronutrients, for instance, just for NPK. So we take that ratio. And then what we also do is we say, okay, that’s cool. We’ve compared the crop price to the fertilizer price.

00;08;23;08 – 00;08;50;28
Dr. Hunter Biram
Now let’s put that in the context of how that’s changed over time. And so what we do is we make a comparison in these graphs to 2011. And so if you remember Doctor Loy’s newsletter, from, from last week, he talks about, the price index of crop prices received or. Yeah, the price received for, for crop prices as well as the prices paid for inputs and how 2011 was a relatively stable year.

00;08;51;00 – 00;09;11;26
Dr. Hunter Biram
and so we also do that and so we, we, we, we follow that line of a line of thought. And so we compare everything to 2011. And so what we what what we find is based on each input, there are some things that are similar and some things that are different. And there’s there’s one key takeaway for, for farmer income that we’re going to talk about.

00;09;11;26 – 00;09;35;28
Dr. Hunter Biram
And so, for right now, the comparison initially is, you know, we’re looking at 2011 as the base year, but then I’m thinking, okay, well, we have that. So how did this change over time have this pattern change over time? So, generally what we see is, the biggest increase in the crop price relative to the input price.

00;09;36;06 – 00;10;00;12
Dr. Hunter Biram
We see the we see that is strongest, in that, in that in, in the year 2021. And why is that? That’s because of, you know, people that the Covid restrictions were being relaxed at that point. I remember being a case state and I remember it being, it being 2021. And we were trying to think now we were we were still I think we were in person, but we had to wear a mask.

00;10;00;13 – 00;10;17;06
Dr. Hunter Biram
I mean, things were starting to open up and people were starting to get out more. And so there was demand. And, so with that demand, came, stronger prices for, for ag products. And so we saw that get pretty strong in 2021. That’s one thing that I note, you know potassium and for phosphorus nitrogen is really interesting.

00;10;17;06 – 00;10;42;27
Dr. Hunter Biram
And, and it’s it’s it’s interesting because there’s a lot of variation in what’s happening with nitrogen. But, one thing in nitrogen that is concerning to me is how, the, this crop price compared to the input price and how strong the crop price is compared to the input price is, is very low. And, I mean, I’m looking at levels that are similar to whenever we, wrote the, 2014 farm bill.

00;10;42;28 – 00;11;19;18
Dr. Hunter Biram
So, like, I’m thinking about farm bill implications here. So, you know, especially looking at potassium and phosphorus that, that that story is very strong where this where the crop price is as weak in 2023 as it was in 2013. That’s all you got. And that that to me is probably the biggest takeaway from from looking at this comparison is the crop price received is, just as weak or weaker in some instances as it was in the time period that we wrote the 2014 farm Bill, which, I think emphasizes how important the farm safety net, actually is, in helping to stabilize farm incomes.

00;11;19;18 – 00;11;26;02
Dr. Hunter Biram
So that’s, you know, that’s the long and the short of it really. Of what? Of what we found. I mean, encouraging us obviously, to read more of the details.

00;11;26;05 – 00;11;51;13
Riley Smith
Right. And and we also want to make the point that, it’s covering the major crops that we well, that’s in the commodites this in, in our market report at the end. So corn, cotton, soybeans, rice, peanut, and wheat. So we did analyze all those besides nitrogen, for producers. They know that, you know, soybeans are nitrogen fixed so they, they produce their own nitrogen.

00;11;51;13 – 00;12;21;27
Riley Smith
So, but, we did, we did cover nitrogen. In the rest of them, this for is corn and everything else goes. But, Yeah. What what doctor Biram saying, looking at the end of, like, 20, 23, it falls in the same range as it is, like 2013 was, after it peaked in between 2021 and 22, 2022.

00;12;21;29 – 00;12;27;25
Riley Smith
it it had a peak and then it had a very it steadily and well and.

00;12;27;25 – 00;12;29;24
Dr. Hunter Biram
It was a very sharp decline because I.

00;12;29;24 – 00;12;30;23
Riley Smith
Mean tail off.

00;12;30;23 – 00;12;54;22
Dr. Hunter Biram
Going back to that, going back to that big price increase in, 2022, I mean, which was which was driven by that, and, Russian invasion of Ukraine. So, yeah, you see a big drop off in 2022 compared to 2021. And that that decline, has continued for, for most of these crops in 2023. And, you know, I would expect in 2024 it’s going to decline even further.

00;12;54;22 – 00;13;00;04
Dr. Hunter Biram
I mean, so it’s just, there’s no upward trend that is encouraging to me at the moment.

00;13;00;06 – 00;13;06;23
Riley Smith
And at the moment we, if you’re farming cotton or corn, bless your heart.

00;13;06;25 – 00;13;31;14
Dr. Hunter Biram
I mean, really, I mean, in all seriousness, it’s to me, consistent across all three of these nutrients, looking at corn and cotton, I mean, the the we’ll just say the, the purchasing power of corn. Cotton is, the weakest amongst the, amongst the competing crops. and, I mean, that’s just in 2023. And, I mean, prices have only fallen since then, so it’s,

00;13;31;17 – 00;13;40;07
Dr. Hunter Biram
Yeah, it’s it’s not great. I mean, the the financial condition, in the ag economy, it’s just not it’s not very sound at the moment.

00;13;40;07 – 00;14;01;29
Riley Smith
And you know, for farmers sake, I hope that they book corn like I looked at yesterday. And we’re going to get to the market report at the end of this. But I looked at corn yesterday, and it is getting the spot cash price comparative to what September futures are, which I believe is the earliest delivery month. It is deadly going down.

00;14;01;29 – 00;14;21;03
Riley Smith
It went down $0.20 since the last week. So I hope it, I haven’t looked at what the, other futures are. but I just hope that they book their corn out. That’s just corn crop. I don’t know the rest of them. They are steadily, steadily fluctuating. But.

00;14;21;05 – 00;14;45;05
Dr. Hunter Biram
Well, yeah. I mean, you talk about booking. I mean, the best time to book is, you know, in the May, May and June window. So, I mean, if you were able to take advantage of some price ups, the cash market in May and June, you know, you might be okay, but I mean, for those who haven’t been able to do that and didn’t do that, and take advantage of that, weather risk premium that we normally see in that May-June window, it’s going to be it’s going to be tough at harvest if you haven’t booked any.

00;14;45;05 – 00;15;11;09
Dr. Hunter Biram
And, you know, if you have stories, I would encourage you to take advantage of storage and, doing some post harvest marketing, you know, in that winter time window and the January February window, I know at that time you’ll be thinking about planting next year’s crop. Lord willing and, but, you know, at the same time, I think, you know, generally what we see is that the cash price falls in harvest time because there’s just a, a glut of supply is along the short of it, you know, it’s just a glut of supply.

00;15;11;09 – 00;15;23;00
Dr. Hunter Biram
And so, once that harvest time rush cools off, we start to see those prices, come up in that post harvest window because, everyone’s harvested by the end.

00;15;23;02 – 00;15;25;02
Riley Smith
That’s what we got on that. I mean.

00;15;25;07 – 00;15;26;17
Dr. Hunter Biram
We’re just peachy.

00;15;26;20 – 00;15;51;12
Riley Smith
yeah, we’re just peachy. It’s, Or we’re kind of getting this this this ball rolling. pretty smooth. So. But, with that, once again, I want to thank everybody, for joining this another episode of this podcast. we hope we’re doing a good job. And, if please, if there’s any, any kind of feedback that you have, negative or positive, please email us.

00;15;51;12 – 00;15;57;16
Riley Smith
Or, is there is there somehow that they can come in on the Spotify or Apple Music? I don’t think so.

00;15;57;18 – 00;15;58;06
Dr. Hunter Biram
I don’t think so.

00;15;58;12 – 00;15;59;09
Riley Smith
Just review.

00;15;59;12 – 00;16;08;13
Dr. Hunter Biram
Yeah. But, I mean, I think, I think my emails listed, but I mean, you can always reach out to me or or Riley or or Ryan.

00;16;08;19 – 00;16;33;19
Riley Smith
Yeah. If you’re wanting to hear something like here’s something in particular as far as the market report now, as far as our topics go, we’re we’re, we’re slowly getting that built as a, master Excel sheet. So we can have topics each week. But with that, thank you again, Doctor Biram, for coming in this morning and talking fertilizer prices in the data that we put together, not put together.

00;16;33;21 – 00;16;36;20
Riley Smith
really, really think it’s some, compelling stuff.

00;16;36;22 – 00;17;00;26
Dr. Hunter Biram
Yeah. And, I’m very pleased to have this historical look at, at prices and really all of our inputs. And, you know, we’re just focusing on fertilizer right now. it’s good to know. it’s good to know we’re where we’ve been. And, maybe understand more where we are and potentially where we’re going. I mean, just looking at a price without context doesn’t really tell you a whole lot.

00;17;00;28 – 00;17;16;09
Dr. Hunter Biram
but when you put a price in the context of something else, like how we, you know, look at a fertilizer price in the context of crop prices, we can see like, okay. Yeah. Well, financial prices have come down, since 2012 and, you know, since that high in 2012. But,

00;17;16;11 – 00;17;35;24
Riley Smith
Well, I love what I love about this is, is how it tied into brands last week talking about disparity, between the crop or between prices of inputs and outputs. And so this I mean, that’s exactly what we’re preaching is just, what the value of what you’re putting in versus the value of what you’re getting out of it.

00;17;35;25 – 00;17;43;21
Dr. Hunter Biram
Yeah, that’s exactly that’s exactly what we’re trying to do. And, it’s, I’m not seeing any upward trend at the moment.

00;17;43;24 – 00;17;48;21
Riley Smith
No, but hopefully there’s a farm bill coming.

00;17;48;24 – 00;18;04;20
Dr. Hunter Biram
A we can only hope. We can only hope. I mean, as we’ve talked about before, you know, the, this year’s very unlikely for various reasons, which we’ve started before. but, yeah, it’s, times aren’t looking good out there in farm country mean.

00;18;04;22 – 00;18;22;07
Riley Smith
No. Well, we, but that’s why we’re here. We’re trying to trying to make a difference and help them out. That’s right. Well, everyone, we, want to thank you again for joining another episode of Morning Coffee Night Markets. we hope you have a great rest of your day. Following this will be the market report with me, Doctor Biram.

00;18;22;07 – 00;18;30;10
Riley Smith
Thank you so much for coming in this morning and talking with us and talking prices and markets and all that lovely stuff.

00;18;30;13 – 00;18;32;22
Dr. Hunter Biram
Hey, thanks for having me.

00;18;32;25 – 00;19;02;12
Riley Smith
All right. Well, hello, everybody. So here’s your, market update for the week. So you commodity futures September 24 corn, $3.83 bushel. that’s down $0.25 from a month ago. Price at $4.08 a bushel year ago was down $1.14. at $4.97. September 24. Rice is at $15.25, cwt that’s $15.25. per/cwt that’s down $0.14 from a month ago.

00;19;02;15 – 00;19;56;00
Riley Smith
Price at $15.39. it’s down $0.60 year agos price at $15.85. November 24 Soybeans, $10.23 per bushel, down $0.81 for month ago. Price at $11.04, down $3.18 from year goes price at $13.41 July 25 Wheat $5.90. $0.89. My bad bushel. let’s try that again. $5.89 per bushel. that’s down $0.39 from month ago price at $6.28 per bushel, down $1.29 from last year’s price of $7.18 per bushel.

00;19;56;03 – 00;20;25;12
Riley Smith
December 24 Cotton is at $0.69 per pound. and that’s down $0.04 for a month ago’s price to $0.73, down $0.17 from year ago’sprice at $0.86. Peanuts. Weekly, U.S average $532 a ton. There is no change from a month ago. It was $532 a ton a month ago, and it’s down $42 from year goes price at $574 a ton.

00;20;25;15 – 00;20;54;20
Riley Smith
your fertilizer prices this week, there’s no change. expect some change next week. Probably, just kind of forecasting that, Urea price is still at that $492.50 per ton. UAN 32-0-0 is at $398.50 per ton. DAP is at $817.50 per ton. Potash is at $493.50 per ton. AG lime is at $60 a ton.

00;20;54;21 – 00;21;21;22
Riley Smith
Your diesel price this week is at $2 and 66, cents per gallon. Mississippi River level this week, current at 8.96ft a year ago was at -4.0ft, -4.08ft. My bad. that’s your market report for the week. I want to thank you all again. You’ll enjoy the rest of your workday. enjoy the rest of your morning coffee, and we’ll catch you on the flip flop.

00;21;21;26 – 00;21;22;17
Riley Smith
Bye bye. Now.