Managing risks in a volatile nitrogen market

By Greg LaBarge, Ohio State University Extension

Other than land cost, nitrogen is the highest-priced input we pay for in the corn production budget. All signs are that volatile nitrogen markets will be with us for the 2023 crop. Recently, farmdoc daily looked at Illinois price fluctuations since June 2022. The high of $1,635 was on June 2, and the low of $1,153 happened on Aug. 25. By Oct. 6, prices are up to $1384. The volatility will likely remain due to uncertainty about natural gas prices from continued Ukraine-Russia tensions and unknown U.S. winter heating 2022-2023 season. What do natural gas prices have to do with nitrogen prices? Natural gas is key to the industrial fixation of nitrogen through the Haber-Bosch process. Natural gas is 75% to 90% of the operating cost for nitrogen production.

An October 2022 article from the farmdoc daily crew at the University of Illinois discusses tools for managing nitrogen price risk.… Continue reading