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<blockquote data-quote="SRBeef" data-source="post: 617570" data-attributes="member: 7509"><p>Most corn nitrogen fertilizer comes from natural gas which is in turn usually almost a byproduct of crude oil production.</p><p></p><p>Natural gas can be shipped as a gas in a pipeline - as across Russia, Ukraine, etc, or it can be liquified and shipped in a tanker ship, or it can be turned into urea at or near the point of origin. Urea as a dry product is much easier to store and ship than a gas/lpg or ammonia which is extremely hazardous. </p><p></p><p>The two primary sources of N for corn are ammonia - made from natural gas or dry urea. Liquid N (28% or 32% is typically made from dry urea mixed with water etc by various processes.</p><p></p><p>N prices have declined enormously from their peaks last summer and typically follow the crude oil prices somewhat. There is and will be plenty of N available for the coming growing season at more rational prices than thought last summer.</p><p></p><p>Ethanol is mandated to be mixed at a certain percent of gasoline. However gasoline consumption is down so the ethanol fraction is down. Also as the retail price of gas has dropped from about $4 to under $2 per US gallon, the attractiveness of E-85 with its price advantage has dropped and so has consumption.</p><p></p><p>Other fertilizers have leveled or started to drop as folks look closer at what they need rather than just dump it on as they always have. Soil tests and more efficient use of fertilizers can often reduce fert costs without affecting yields.</p><p></p><p>Rents on corn ground shot up and in many cases have been locked in at very high prices which are not sustainable at current corn prices. However this may be a good thing in the long run, except for those that signed long term leases at high rates, as there was no way that corn could keep up with the rise in rents. </p><p></p><p>Overall I feel that corn in the $4 range is much more sustainable and good for the ag economy as a whole than $7 corn. The entire ag economy can stabilize and do well at $4-4.50 corn and $9-10 beans. Both from a sellers and buyers perspective. It has only been months ago that we were at $2 corn and $5 beans!</p><p></p><p>Sure the big seed and chemical suppliers are slow to lower prices but competitive forces will eventually take hold again.</p><p></p><p>If you are a feeder I would agree that $4 corn or anything under that is not a bad spot to buy.</p><p></p><p>What we need now is to get cattle prices in line with where they need to be to make even a modest profit at the cow/calf or feeder level. </p><p></p><p>Competition may take a while but I feel will eventually kick in, slowly, to raise cattle prices. Right now it is a fat cattle buyers market and they are not going to pay a cent more than they need to and that means the feedlots are not going to pay a cent more than they need to. jmho.</p></blockquote><p></p>
[QUOTE="SRBeef, post: 617570, member: 7509"] Most corn nitrogen fertilizer comes from natural gas which is in turn usually almost a byproduct of crude oil production. Natural gas can be shipped as a gas in a pipeline - as across Russia, Ukraine, etc, or it can be liquified and shipped in a tanker ship, or it can be turned into urea at or near the point of origin. Urea as a dry product is much easier to store and ship than a gas/lpg or ammonia which is extremely hazardous. The two primary sources of N for corn are ammonia - made from natural gas or dry urea. Liquid N (28% or 32% is typically made from dry urea mixed with water etc by various processes. N prices have declined enormously from their peaks last summer and typically follow the crude oil prices somewhat. There is and will be plenty of N available for the coming growing season at more rational prices than thought last summer. Ethanol is mandated to be mixed at a certain percent of gasoline. However gasoline consumption is down so the ethanol fraction is down. Also as the retail price of gas has dropped from about $4 to under $2 per US gallon, the attractiveness of E-85 with its price advantage has dropped and so has consumption. Other fertilizers have leveled or started to drop as folks look closer at what they need rather than just dump it on as they always have. Soil tests and more efficient use of fertilizers can often reduce fert costs without affecting yields. Rents on corn ground shot up and in many cases have been locked in at very high prices which are not sustainable at current corn prices. However this may be a good thing in the long run, except for those that signed long term leases at high rates, as there was no way that corn could keep up with the rise in rents. Overall I feel that corn in the $4 range is much more sustainable and good for the ag economy as a whole than $7 corn. The entire ag economy can stabilize and do well at $4-4.50 corn and $9-10 beans. Both from a sellers and buyers perspective. It has only been months ago that we were at $2 corn and $5 beans! Sure the big seed and chemical suppliers are slow to lower prices but competitive forces will eventually take hold again. If you are a feeder I would agree that $4 corn or anything under that is not a bad spot to buy. What we need now is to get cattle prices in line with where they need to be to make even a modest profit at the cow/calf or feeder level. Competition may take a while but I feel will eventually kick in, slowly, to raise cattle prices. Right now it is a fat cattle buyers market and they are not going to pay a cent more than they need to and that means the feedlots are not going to pay a cent more than they need to. jmho. [/QUOTE]
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