Crop Inputs

Crop input updates

Oil prices are holding steady, while cargo is being frontloaded.

Energy prices end the year flat, but dynamics are complex

Oil prices closed the year where they started, at $71 per barrel. Relatively stable prices over the last several months obscure complex market dynamics. Bearish economic sentiment in China, a robust U.S. dollar, increased production from the Americas (U.S., Canada, Guyana and Argentina) and Nigeria, along with lower projected trade due to the application of tariffs by the Trump Administration will likely continue to weigh on prices in 2025. Further, Trump is signaling his desire to end conflicts in Ukraine and the Middle East, which would reduce risk premiums and potentially add supply. These factors may be counterbalanced by continued production cuts by Organization of Petroleum Exporting Countries (OPEC+) members, economic growth spurred by lower interest rates, increased sanctions on Venezuela and Iran, and rising demand from India and other Southeast Asian countries. The Biden Administration imposed sanctions on Russian oil exports on Jan. 10. While this led to a jump in prices, it is unclear if the Trump Administration will support this policy. Forecasts suggest a supply glut of about 1.2 million barrels per day in 2025.

Transportation costs are mixed

Shipping rates are mixed. In December, average bulk vessel prices fell notably due to lower Chinese demand, excess vessel capacity and the normalization of Panama Canal crossings. (Crossings fell drastically in 2023 due to severe drought.) Bulk vessel rates for grains and seed oils declined slightly but remained more stable compared to average bulk prices. Container shipping rates from Asia to the U.S. have increased as shippers frontload cargo ahead of Trump’s inauguration and China’s Lunar New Year. However, rates for vessels departing from West Coast ports to Asia remain relatively flat. West Coast trucking rates increased moderately in December, likely due to increased cargo volume as shippers frontload orders. Generally low energy prices are helping to keep transportation rates down.

Fertilizer prices remain stable

Fertilizer prices are expected to remain relatively stable into 2025. USDA anticipates a 1.4% increase in corn plantings, which would boost nitrogen demand. However, rising production rates in the U.S. and abroad should offset the increased demand. Phosphorus affordability remains a challenge due to a reduction in supply from Chinese export controls, and countervailing duties placed on imports from Morocco and Russia. Potash is the most affordable of the main fertilizer ingredients due to an abundance of Canadian, Russian and Belarus supply in both U.S. and global markets. Some analysts worry that escalating conflict in the Middle East could extend to neighboring countries, potentially disrupting major fertilizer shipping routes like the Persian Gulf and the Strait of Hormuz. Urea prices have dropped 9% over the past year, influenced by declines in ammonia prices, its source material, and lower demand. Many farmers took a cautious approach to urea purchases, anticipating further price drops and reducing overall demand.