August 16, 2013

1. Outlook for 2014 Crop: Ag Input Prices Alan Miller Farm Business Management Specialist August 16, 2013

2. Fertilizers • Will fertilizer prices bottom during 2013 fall fill or continue downward into the spring? • How will a late harvest this fall affect fertilizer markets?

4. Fertilizer Price Declines This Fall

6. U.S. the Low Cost Ammonia Producer

9. Price Outlookfor Nitrogen Fertilizers • Prices may to drop another 5% or more depending on the product • Growing domestic & global capacity (Chinese urea) • Cheap natural gas in US • Supply interruptions in Trinidad • Planting intentions for 2014 crop • Financial position of crop farmers • Growth in US market is in UAN and urea • Go slow on forward pricing 2014 nitrogen needs

10. US Production of Phosphate Fertilizer Outpaces Sales and Exports

11. Price Outlook for Phosphate Fertilizer • Phosphate – large inventories will continue to exert downward pressure on prices • Declines of 3-5% from current levels possible • Spring planting season in the US was not ideal for P & K application • Relatively high prices reduce demand • Late US harvest may also negatively affect the fall application season

12. North American Potash Cartel Reduces Production to Reduce Supply Glut

13. Price Outlook for Potash Fertilizers • Cartel breakup destabilizes industry • Beloruskali & Uralkali will now compete for market share; their joint marketing venture (BPC) ended by Uralkali in July • 24% increase in production planned by Uralkali • Indicative of the production capacity curtailed by members of the two potash cartels: Canpotex and BPC • Large drop in world market prices expected • US court hands down favorable antitrust ruling against members of the two potash cartels • Prices likely to decline 5-10% this fall and may decline even further into next spring

14. Seed Price Situation • What a difference a year makes! • Good seed production conditions in Midwest • A little too cool at times • Quantity and quality look good at this point • Soybeans – pod set very high • Corn – crop is much better than last year but two weeks later • Corn - early frost is a concern

19. Outlook for 2014 Seed Prices • Corn, beans and wheat seed prices will be up 2-6% overall • Factors favoring higher prices • R & D costs to recover • Two previous years were poor-production, high- production-cost years • Corn and bean farmers are perceived to be strong financially with plenty of liquidity • Expect mixed bag in product pricing as dealers are sensitive to declining commodity prices and crop economics in transition • Expect bigger increases for newer products

20. Crop Chemicals Situation • Growing sales have lead to higher prices for chemicals as a group • Perception that the role for chemicals in crop protection may be increasing • How will lower commodity prices affect farmer spending for crop protection products? • Industry expecting large planted acreage

22. Outlook for Crop Chemical Prices • Expect fungicide and insecticide prices to increase 2-4% • Expect herbicide prices to remain flat

25. Texas Spot Prices for Propane

26. 2014 Fuel Price Forecast • USEIA forecasts • 4% lower crude oil and diesel prices in 2014 • 10% higher natural gas prices in 2014 • Propane futures are generally down moderately for 2014 • Local prices currently around $1.45/gallon • Factors keeping prices relatively stable • High level of domestic energy production • No big shocks to the energy system lately • Slowly growing US and global economies

29. Questions, Comments