by Nick Paulson, Gary Schnitkey, Joana Colussi and Jim Baltz
Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf, Department of Agricultural, Environmental and Development Economics, Ohio State University
The prices of fertilizer products reached record highs in nominal terms in 2022. However, the price spikes in the mid-1970s exceeded those of 2022 in real terms and fertilizer expenditures relative to crop revenues were higher in central Illinois for the 2009 crop year than what is currently projected for 2023.
Average Illinois fertilizer prices have declined consistently from the peaks reached in the second quarter of 2022. Current projections from 2024 Illinois crop budgets suggest a return to the historical average for fertilizer expenses as a share of expected corn revenue.
While this represents some optimism regarding fertilizer expenditures and corn production costs more broadly for the coming crop year, current projections for farmer returns are negative due to increases in costs of other production inputs and high cash rents to persist into 2024 (see farmdoc daily from August 29, 2023). Furthermore, projected per acre fertilizer expenses for the 2024 crop year are above the fertilizer costs experienced during the most recent extended period of lower commodity prices and farm returns experiences from 2014 to 2019.
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