Professor of Soil Fertility
Department of Crop Sciences
(217) 333-4424; email@example.com
The nitrogen used in the production of anhydrous ammonia comes from the very air that you breathe. Since it is easy to “mine,” all nitrogen fertilizers should remain cheap. Wrong answer. The nitrogen is “cheap” torecover, but the hydrogen (Figure 1) connected with it is getting much more expensive. U.S. ammonia production is based on hydrogen from natural gas, a product that is projected to be in short supply for this coming season. As of the end of June, stored supplies of natural gas were about 30 percent below the average for the last five years, and, as a result, natural gas prices are in the $6.00 range, compared with $3.65 a year ago. Ammonia production requires about 30,000 MMBTU of natural gas per ton, so for each $3.00 increase in gas price, the cost of production of ammonia is increased about $90.00 per ton.
Figure 1. Anhydrous
All of this points to higher prices and a reduction of domestically produced nitrogen for the 2004 season. Since all nitrogen products are derived from ammonia, the price increase will be across the board. The only mediating factor: Foreign producers are not experiencing this sharp increase in gas prices, so there will likely be more urea and UAN solutions coming into the U.S.
Even with the higher cost, nitrogen is an essential purchase for any field that grows corn (Table 1). These data suggest a reduction of about 6 to 7 lb. of N per acre for each 5-cent increase in the price of N per pound, which is equivalent to an increase of $82.00 per ton of ammonia. In both rotations, adjusting the N rate downward to accommodate a 5-cent increase in the cost of a pound of N will result in a yield decrease of only about one bushel per acre.
|Price ($/ton)||Cost ($/lb.)||Optimum N Yield @ opt N||Optimum N Yield @ opt N|
This projected price increase plus concern about the environment means that we must make sure that we are using nitrogen as efficiently as possible—in other words, that we are using the Best Management Practices: