Stratton to have spring cattle sale April 22nd

Gary Sliworsky
Ag. Rep.

Fertilizer prices have risen significantly in the past two years, particularly for nitrogen and potash. How much less should you use? Following is information from Keith Reid, Soil Fertility Specialist with OMAFRA.
Nitrogen prices are driven by the price of energy, since natural gas is the main feedstock for ammonia production, and ammonia is the base for all other types of nitrogen fertilizer. Potash prices have been driven by strong world demand, particularly in China and India, so that supply is inadequate to meet the requirements and prices rise. Neither of these prices is expected to come down in the near future.
Compounding the issue of high fertilizer prices are low prices for most commodities. In general, crop response to nutrients follows the “law of diminishing returns”. The greatest increase in yield is from the first pound of nutrient added, and each additional pound of that nutrient gives a smaller yield increase. Eventually, a maximum yield is reached, and adding more fertilizer beyond this point doesn’t produce any yield increase, and may actually cause yield to decline. This is shown in Figure 1. The Maximum Economic Yield is lower than the maximum yield, occurring where the difference between the cost of the fertilizer and the value of the crop is greatest.
As the cost for fertilizer increases, or the value of the crop declines, the ratio between these two prices increases. Price ratio is simply the number of pounds of grain that it takes to purchase a pound of nutrient. Traditionally, it has taken about five pounds of corn to buy one pound of nitrogen (Price Ratio = 5), but with current prices it is taking about ten pounds of corn to buy a pound of nitrogen (Price Ratio = 10).
The greatest challenge in determining the price ratio is predicting the price of the grain that will actually be sold (or fed). This means anticipating where the markets will be, plus any government stabilization payments, but minus any trucking, drying and marketing costs to give a net price per bushel or pound of grain. For grain that is fed on-farm, the value should be calculated by using the cost of feed to replace any lost yield, so the values used may be higher than the cash grain market.
For nitrogen on corn, each unit of increase in price ratio above 5 would reduce the maximum economic rate of N by 6 pounds per acre. This means that at a price ratio of 10, the optimum nitrogen rate would decrease by about 30 pounds per acre from what is normally applied. The reduction in N requirements is not as great for winter wheat, but we would expect optimum rates of N to be about 15 pounds per acre less than what is usually applied. There is not as much documentation for other cereals, but I would anticipate a similar reduction to wheat would provide maximum return per acre.
Predicting optimum potassium rates is complicated by the fact that potassium is retained in the soil, so yield responses are spread over more than one crop. A soil test remains your best guide to which fields are most likely to give a profitable response to potassium fertilizer.

Dates to Remember
Apr. 22 – Spring Cattle Sale, Stratton Sales Yard