An Outlook on 2022
Apr 15, 2022
There’s no doubt that American farmers have experienced major challenges in the past two years, partly due to the lingering pandemic, supply chain issues and labor shortages.
As 2022 continues, those challenges are not off the table yet, but things may continue to look up. In an effort to ease the minds of growers, MKC's procurement managers provide insight on the 2022 and 2023 growing season.
The availability of crop protection products have been on the forefront of the American farmer’s minds since the start of the pandemic.
“Producers are certainly not out of the water yet. There will be more challenges down the road, but we have reason to be optimistic for the 2022 season,”CPP Manager, Tres Guttierez says.
Even though MKC and Mid-West Fertilizer operate as separate entities, the two approach vendors as one business allowing for a larger relevance in the market. The size and scope of the two companies combined catch the attention of large manufacturers, allowing for the ability to acquire more product.
“We were able to stock more product in the fall ahead of the projected inflation, putting us in a better price and inventory position for our growers going forward,” Guttierez says.
This certainly did not come without challenges, though. One of the products MKC ordered, PowerMax®, was significantly behind on its shipping date. To ensure there would be enough product in inventory, MKC leased its own chemical tanker trailer to pick up the product and deliver it to MKC and Mid- West Fertilizer locations.
“We were one of the first retail locations authorized to pick up our own PowerMax®,” Guttierez says. “If we wouldn’t have leased our own tanker trailer, we’d have 50% less product than we do today.”
2022 may continue to throw challenges at producers, but planning and being prepared is key.
“We have a long way to go in 2022, but things are looking up,” Guttierez says. “Our growers need to plan, plan early and be flexible in 2022.”
As a retailer that is on the forefront of bringing new seed offerings, there is never a shortage of new ways to improve operations for member-owners.
“In the last year, we’ve made significant investments to improve seed ordering and dispatch,” says Jake Shelton, director of seed. “As our customers operations continue to grow, we're becoming more efficient as a retailer to meet the needs of our customers during planting.”
Seed technology and herbicide trait options are rapidly changing. MKC and Mid-West Fertilizer transitioned away from Xtend® and LibertyLink® to XtendFlex® and Enlist®. In addition, seed suppliers are working on soybeans stacked with four and five herbicide traits.
The corn seed industry continues to make advancements in short statured corn with better disease tolerant hybrids and improved insect traits.
“I’d encourage every grower to have a conversation with a trusted advisor on what your largest agronomic hurdle is. There’s a strong chance something is coming to the seed market in the next few years to address those hurdles,” Shelton says.
High fertilizer prices have made headlines for over a year. The question on everyone's mind is "when will the price drop?" It’s hard to determine exactly when customers could see a drop in price due to factors across the globe.
Some key producing countries have stopped production and exports resulting in supply availability issues and skyrocketed costs.
“China is the World’s largest producer for Urea and Phosphates, and they stopped production due to the 2022 Winter Olympic Games. Although the U.S. doesn’t import directly from China, when you take the largest producer out of the market, it shrinks supply significantly and prices increase,” says Troy Walker, director of retail fertilizer. “Once China re-enters the market, producers should see a significant drop in prices.”
“While China’s production shutdown is a concern, there are other factors that weigh in,” says Walker. “If China stops importing corn, the grain and fertilizer market could see a significant dip. Ukraine has stepped in as the major driver over the last 3 weeks. Getting into planting season and actual physical demand will be the next driver.”
Other factors effecting cost and supply are grain markets. With grain still running high, fertilizer prices won’t significantly drop. If the grain prices drop unexpectedly, fertilizer will be close to follow.
While the fertilizer market brings significant challenges to producers, there’s reasons to be optimistic for the future. Due to the high commodity markets, there will be great opportunities for 2023.
“Customers should look into locking in grain and fertilizer for the 2023 crop. It will ensure some profitability and takes some risk off the table, but the key is to be patient,” Walker says.
“Due to the high volatility in the market, it’s fine to contract some fertilizer and grain, but not all at once. This brings unwanted risks. Work with your trusted advisor or strategic account manager to make the best decisions for your operation.”
Want to hear more from our procurement managers? Join us Thursday, April 21 for the 2022 Outlook Webinar! We will hear from MKC's procurement team covering fertilizer, energy, crop protection, seed and grain. Click here to register!