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Corn Inventories Sends Ripple Effect




While market conditions have stabilized in the last several weeks, Harry L. Mathis, corporate director of Materials, Distribution and Order Fulfillment for Lebanon Seaboard Corp., predicts that prices for fertilizer products high in nitrogen, phosphorous and potassium will increase by 10 percent or more for the 2011 growing season. Any disorder in the worldwide supply chain, which could be brought on by disruptions at nitrogen plants and shipping interruptions, could cause another spike in costs.

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Golf course superintendents, turf managers and landscape contractors wondering how to budget for 2011 fertilizer prices might want to pay special attention to the price of corn.

''As corn goes, so goes nitrogen and as nitrogen goes, so go fertilizer prices,'' said Harry L. Mathis, corporate director of Materials, Distribution and Order Fulfillment for Lebanon Seaboard Corp., parent company of LebanonTurf.

The USDA's corn forecast - recently adjusted downward 3.6 percent - caused a ripple effect that likely will be felt at golf courses, sports fields and anywhere turf managers rely on nitrogen-based fertilizers. The forecast sent corn futures soaring to near $6 per bushel, a price that encourages farmers to plant more corn, which in turn, requires increased nutrients. The subsequent jump in worldwide demand for nitrogen increases costs to fertilizer producers such as LebanonTurf.

''We were sailing along in pretty stable condition this summer, and then the USDA numbers and the corn harvest sparked the markets,'' Mathis said. ''It just goes to show how fragile and interconnected the supply chain is.''

While market conditions have stabilized in the last several weeks, Mathis predicts that prices for fertilizer products high in nitrogen, phosphorous and potassium will increase by 10 percent or more for the 2011 growing season. Any disorder in the worldwide supply chain, which could be brought on by disruptions at nitrogen plants and shipping interruptions, could cause another spike in costs. ''N, P and K are in the mix together,'' Mathis said.

''There's always the possibility of another spike,'' Mathis said. ''But we have positioned ourselves to ensure an adequate supply of product that maintains our standard of quality and minimizes the effects of spikes.'

Mathis says the best way for end-users to control their costs is to place their orders and take delivery before ''crunch time.''

''The corn number is real; the nitrogen situation is real, and when the season hits, low inventories of raw materials stateside could force some significant availability and pricing issues in the spring,'' he said.


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October 21, 2019, 8:56 am PDT

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