Fertilizer costs on rise again

COLUMBUS — Landscape and lawn service companies may be in for another year of high fertilizer costs.

The U.S. Department of Energy recently released its first estimate of natural gas prices, another projected historical high, which translates into higher fertilizer costs for the fall compared to this past spring.

"The Department of Energy expects natural gas prices to climb to about $6.20 to $6.50 per million BTUs (British Thermal Units) this fall," said Matt Roberts, an Ohio State University agricultural economist. "That works out to fertilizer prices of $450 per ton. In the spring, prices were averaging around $400 per ton."

Natural gas prices are currently under $6 per million BTUs — lower than usual because of unseasonably cool temperatures across much of the country. But whether those prices remain low heading into fall and winter remains to be seen.

"If this fall and winter are warm, like last year, we could see those projected prices decline," said Roberts. "But if it's a cold and long winter, those prices could climb quickly."

"There is almost a direct relationship between wholesale fertilizer costs and natural gas prices," he added. "And because of the volatility of the natural gas market, it's becoming more difficult for growers to lock in their fertilizer prices with distributors."

High summer and winter energy consumption, along with declining domestic natural gas inventories and limited import suppliers, are just some of the factors behind the rise in natural gas prices in recent years. And it seems the trend will continue for some time to come.

Chart showing growth and forecast of natural gas prices.

"Fertilizer prices could jump again this fall, says OSU economist," Agriculture Online, August 24, 2004.