To fert or not to fert: Dr. Hart, Lewis Stearns

Shay

Foulk: Welcome back, everyone, to another episode of the Ag View Pitch. Today you have Shay Foulk joined with the agronomist, Anonymous, Lewis Stearns, and the wonderful Dr. Chad Hart. Guys, how are you today?

Dr.

Chad

Hart: Doing good.

Shay

Foulk: Great. Well, I appreciate the conversation. We're here today to talk specifically around the impacts that fertilizer is having in the decisions that are being made for farmers here at the end of 2025, and the implications that that hosts for 2026. You know, high level, Dr. Hart, I wanted to start with you a little bit. What, what's your feeling? I guess just the feeling that you have of where we're at in the fertilizer marketplace here today. And maybe compare that back to the closest I've seen is maybe back in 2008. What's different? What's the same? What are you feeling?

Dr.

Chad

Hart: Well, lots of things have changed since 2008 when it comes to whether it's crop market or fertilizer. But as we're looking right now, I mean, we're at a period of relatively high prices, not as high as we saw in 2022. But let's face it, we really haven't had a breather since then either. And so farmers are continuing to see higher costs, even though our revenues have been on the decline the last few years. And especially with fertilizer, it's a challenge because we're in the— we're in a global market for our nutrients. The idea is if it were just all dependent upon U.S. production, we would likely see lower costs than we have right now.

But since we're competing for that nitrogen, that phosphorus, that potassium with places like China, India, Brazil, Argentina, even in places like Russia and Ukraine, The idea is that means we're paying higher prices, that competition leads to higher cost for producers right now.

Shay

Foulk: And it seems like on a relative scale, we're waiting on the rest of the world to start making some of these purchase orders for the price to be set. How small of a player is the U.S. on a global scale?

Dr.

Chad

Hart: It varies quite a bit when you're looking at— depends on what nutrient you're staring at there. When it comes to something like nitrogen, We create about 90% of what we use, so we only end up importing about 10%, which means we're a player in that market, a fairly large player, but we don't necessarily dominate the sales when we're looking there. So we again tend to be a price taker when it comes there. A big one where we do tend to see the US being a major buyer and we have to buy a lot is potash. When it comes right down to it, the US doesn't have the potash deposits, or, you know, the ones we do are harder to get to than the ones in Canada. And Canada is the dominant supplier there. So we import roughly 80 to 90% of all the potash that we use.

Lewis

Stearns: Hmm.

Dr.

Chad

Hart: So we're definitely dependent upon, again, the global market there. And when you're talking about other nutrients, they tend to fall in between those two guidelines there, you know, between 10 and 90%. So there's a lot of swing there. But when you're thinking here, I also want you to think about, like I say, you know, think of a country like Brazil where they have been not only building up their ag production, but each and every year they're bringing more, more and more land into production. And so what that's driving is that's accelerating their needs for nutrients at a time when ours have been, I'm going to argue, relatively flat when it comes to synthetic fertilizer. Over the past couple of decades.

Shay

Foulk: So potash, you know, Lewis is actually in a conference room about one story below me right over here for an agronomic meeting in our farm operation today. And Lewis says, I just can't put on enough potash for the yields that we're looking to achieve here. You know, Lewis, when you look at it from a pricing standpoint, you and I have actually been working through— I have called $100 an acre to spend on fertility or whatever the budget is. And making adjustment towards what's going to have the most impact. So when you think about what Dr. Hart said there on, you know, nutrient availability, the pricing that's associated with it, are we a price taker or price maker? All of that factors into the conversations that you're having at the farm gate today. What impacts are you seeing again here in September of 2025 as you start meeting with farmers?

Lewis

Stearns: Yeah, well, Shay, as you know, we aggregate a lot of data together and study that data across a lot of acres. And it continues to show with these high yields that we're pulling off and that we're targeting, we just can't get enough potash or potassium out in these fields. And we can't cut that. We're learning how to be creative with phosphates, and that's our highest priced nutrient. But potash, we cannot cut. It's almost linear to a yield loss when we start to cut the potash away.

Shay

Foulk: With the nitrogen, where does that fall on that scale from a lineup? And I say that from a reference point of I was just in Western Kansas, and good producers out there, they've seen more rain this year than probably 10 to 15 years. They said this isn't what it looks like all the time, so don't get too excited. But there's guys out there that are talking about not even putting any nitrogen on their wheat just because they can't afford it, and they're already in 40, 50 bushel wheat environment or less. So, you know, how do you think about that when people get wrapped around the axle on nitrogen costs, whether it's anhydrous ammonia or liquid in the spring?

Lewis

Stearns: Well, there, it's going to be interesting. There's a huge spread between anhydrous and if you can even get a UAN price right now. And I feel like there's probably going to be a lot of fall anhydrous go on if the weather's right, just because it actually looks fairly attractive in comparison. But it's another nutrient that if, as these yield targets have increased, and no one's happy with 210, 200 bushel corn anymore, a lot of the discussions are 230, 240, 250 plus, we're not just making more nitrogen in the soil because we're shooting for higher yields. We have to fertilize accordingly. It may not be 1 to 1, but we kind of have to match that up. So I'm anticipating a lot of fall work on the anhydrous side just because of that spread. Like you and I talked earlier, I mean, I saw a 20-cent spread just this morning, 20-cent per pound spread between NH3 and UAN.

Shay

Foulk: So I'm actually going to be spending my evening here putting together a video for Joe Vaklovic's podcast here tomorrow morning. And I took a survey, ended up having about 300 responses from all across the country, and I asked for their zip code and then I asked for the quotes on what they had gotten pricing on, you know, potash phosphate or excuse me, potash phosphates, anhydrous, some 32%, and then if they had any other micros that they had gotten pricing on. And I, I only worked my way through the first data set on phosphorus. And I mean, it was a dramatic spread. We had guys that were still getting quotes less than $700 a ton, and then we had areas that were over $1,000 a ton. And that was part of the reason that I wanted to put it together. First, you need to ask about pricing. If you're not getting quotes from your retailers, you need to go out and find a quote.

If you're, if you're not getting a quote, someone has one. And so don't be, you know, I'm not saying anybody's trying to pull the hood over your eyes, but just make sure that you're doing your diligence there. Dr. Hart, you know, that's, that's quite a specific outlook there on, you know, the quotes and how it ends up at the farmer's gate and at what price. But can you give a little perspective there on, you know, how is that? Has it always been that way that we're seeing this sort of price disparity based on geographic location? Do you feel that there's more of that in the recent years? And how does the farmer go about making decisions on that at the farm gate level?

Dr.

Chad

Hart: Well, I'd say there's always been that sort of geographic spread, but probably not quite to this extent. And probably the case here too, I would say you're probably seeing even larger swings even in local pricing depending upon whether, you know, your supplier has that potash already lined up or not. I know in talking with a lot of folks, especially as we progressed here through and, you know, into 2025, especially with a lot of the tariff talk that was on earlier, I know, you know, several folks jumped early in potash to get their supplies in line so that they could firm up those prices as they went in, you know, here into the fall, that they were worried that they, if they didn't lock those supplies in place early enough, then they didn't feel confident in making those offers later on. And so I think you're seeing a lot of that with that spread.

Those that were able to bring it in early, possibly avoid some tariff costs, are able to offer a much better price now than those that are sort of late to the game of lining up their supplies for this fall.

Shay

Foulk: And that's a great perspective for those listening of just maybe your current supplier did a bad job and they're trying to sell you fertilizer because that's the cost that they had into it. And, and I, I'm always an advocate, guys, of doing business with people that treat you right and treat you fair. It's also a year that we need to look at profitability pretty close and say, Do I need to make some phone calls? Do I need to make sure that we're doing our diligence for the business that you operate in the farm there? You know, Lewis, I wanted to, I want to turn back to you from a, from a fertility management standpoint. It seems like a lot of guys have done a good job, even though, like Dr. Hart said, you know, we saw some high prices in '22 leading into '23 there on some of the fertilizer.

It seems like a lot of guys have done a good job here the last couple of years of building their soil levels, with at least the, at least from the phosphate perspective, to be okay to maybe back off a year or two. Is that a, is that too broad of a stroke to paint generally, or are you saying that if we have good soil test information, we can plan accordingly?

Lewis

Stearns: Yeah, so if we have the data and have the soil test info, for sure, we can draw on that phosphorus number pretty, pretty hard. And we're, we're kind of learning, operating the past 3 years on the razor's edge of how much we can push that and maybe we're seeing that we can push it more than we thought. But we have to have that soil test information to go off of. We can't just paint it with a broad brush and say, hey, we can just cut back because prices are, are low. Now, can we get creative with banding or, you know, different things like that? For sure. But we've got to have that data before we can make that, that accurate decision.

Shay

Foulk: And when it comes to that soil testing, so again, September of 2025 here, do farm operations make the decision to go out if they don't have that good data and soil test yet this fall? You know, are we going to get a quick enough turnaround on those soil tests to be able to go out and broadcast or to put it into strips this fall yet? Or are they waiting on that good soil test information and still able to make good decisions as we head into spring, you know, maybe doing a spring broadcast? What's your thoughts there?

Lewis

Stearns: Yeah, a lot of variables that play into that with workload and logistics and all that. Obviously, it's more important to get the work done while it's nice and dry and fit. So we want to be cognizant of that. But if we don't have a good soil test history, then that needs to be a priority is to go out and get that new data captured. If you don't have something in the last 3 years on a field, that probably needs to be updated, especially when we're trying to run a tight budget like we are now.

Shay

Foulk: Okay, so let's talk then a little bit about that spread on the nitrogen versus the, uh, UAN that goes out. You know, do we do a fall application with the possibility of losing some of that nitrogen through the winter? You know, maybe we have a mild spring, and realize some nitrogen loss there versus waiting to do spring nitrogen application either in liquid form, early anhydrous, and/or, you know, side dressing later on in the season. Is there too much of a cost-benefit analysis there on that $0.20 per unit that we just go ahead and get the nitrogen on, or what's your consideration there?

Lewis

Stearns: Field conditions allow, I think we pull the trigger on it. And the discussion we're having is get the field work done, get the N on,, the— how's it go— the bird in the hand's worth two in the bush. Yeah. And if we got to go back and touch some stuff up, more and more people every year getting equipped to do some side dress, and it doesn't have to be a tremendous amount of N side dressing, you know, 10, 15 gallons or 40, 30 to 45 pounds will go a long way. So let's wait and get some more information on that last little bit, you know, this spring or over the wintertime and see if that comes down. But this anhydrous price looks pretty attractive to me that I don't think I'd want to pass it up.

Shay

Foulk: And Dr. Hart, that's where I wanted to turn to you and say, okay, looking over your career, the possibility of having a downturn in these fertility prices as we head into 2026 seems pretty bleak with the global market and the competitiveness that's out there. However, when you go back and look at the charts, there are some years that we did see it drop off dramatically for whatever global reason, you know, maybe maybe the Russia-Ukraine conflict comes to some sort of conclusion here and we get some lower pressure on nitrogen as an example, or have some improved tariff talks. How do you manage around that? To me, it seems overwhelming as a farmer of these are global issues, I have no impact, I just, I got to make a decision.

Dr.

Chad

Hart: Well, I think your last point there is the good point though. You control what you can control. And so the idea is we don't know what's going to happen in those global markets. So the best we can do is evaluate where we're at right now and what's the best decision I can make today. As Lewis sort of pointed out, the idea is, hey, if the fields are great to work here in the fall, we don't know what the spring will look like. We want to take care of as much as we can now to hopefully set ourselves up well. And when we come into fields next spring there, so right now I'd say, you know, as we look at the situation, no, it doesn't look good for, you know, potential surprises on the downside for fertilizer price. Therefore, I need to look at where we're sitting today and evaluate What's my best— let's call it return on the investment here.

I always like to look at it as it's not just the price here, but I'm looking to— I'm paying that price, I'm paying that cost to get a return. I want to maximize that return as best I can.

Shay

Foulk: So from a financial outlook and kind of the work that we do on cost of production, what I would encourage you guys to think about is if you're in a tight spot, you know, the lender is looking at what do we have on line of credit currently for 2025. They understand that you're making these prepay expenses or looking at what decisions we need to make. Don't feel like you can't go out and spend the money that you need to, like we're talking about here, in order to capitalize on what exists today, because waiting until it gets worse is not exactly a better solution. And we don't have the crystal ball, but have that conversation with the lender and say, I feel that we can have profitable levels, if we go ahead and lock in some of these prices.

On the backside, what needs to occur— and this is not marketing advice, but it's just some perspective— sitting at $4.60 on Dec '26 corn today provides an opportunity to at least cover a large amount of variable cost as you're doing some of these prepays. And if you can go out there and set some contract prices, even if it's just an HTA or whatever, at $4.60 and cover some of your variable costs for these prepays, you provide stability to the lender, you have a plan in place. And then if you need to adjust on spring spread, or if we get to next year and corn goes from $4.60 up to $5 on the East 26, you know, progressively maybe lean into that, increase your profitability, take some of those sales. And then, you know, that's when you call up Lewis and in June and say, hey, you know, prices are great. We did a good job getting phosphate, potash bought.

I want to go out here and do some variable side dress rates so that we can really push that crop along. I mean, Lewis, did you have guys that were in that situation from 2024 to 2025 where they thought, eh, we're not going to spend as much money, and then they looked at how good the '25 crop was and said, let's lean into this?

Lewis

Stearns: Not as much as you would think. And honestly, I think that's probably one thing that's holding the crop— the top of the crop back is we maybe didn't fertilize to the levels that we got the weather for in some places. And I think you can just see the top end gone because of that, whether that was nitrogen or potash or pick your nutrient. Maybe we fertilize for 250 and we had weather for 300. And we're going to lie somewhere in between. And Not that anybody's disappointed in that, but we were— the margins were so tight, no one was really excited to go out and spend that extra money.

Shay

Foulk: Yeah, the quickest way to reduce your cost of production is to increase your yield, bar none, basically, from, from all the work that we do with clients on the cost of production. Dr. Hart, I don't, I don't know if you wanted to share any of the slides that you had there, if you feel any of it's relevant. But, you know, I guess as we, as we look to kind of wrap up this conversation, is there anything else that's top of mind kind of in the fertilizer space that you feel that is important for the audience to either know of that it's occurring and/or decisions that they need to be making that we maybe haven't talked about here today?

Dr.

Chad

Hart: Well, I'll just play on something here. I won't necessarily pull up the slides because I don't necessarily think we need the visual, but, but I do want you to think about, as you know, as we talk about here, global demand for these nutrients is sort of ever increasing here. And especially when we look at our use of synthetic fertilizer versus what's happening in the rest of the world. Those are two different stories. For the most part here within the US, our use of synthetic fertilizer has been fairly stable. In this case, you could argue we're supplementing that with manure to get those, you know, added nutrients that we need to chase after the yields like Lewis discussed here.

The idea is with the higher yields, you do need to capture more nutrients, but I would argue we've been capturing more nutrients via either fertilizer or or through our efficiency when it comes to how we've used our fertilizer. We're getting that, you know, efficiency, that nutrient uptake ever increasing when you're looking at U.S. farms. That's not necessarily the case as we look globally, as places like Brazil, China, India are ramping up production. They're using ever-increasing levels of synthetic fertilizer, and that's why we're going to see Probably as we look forward, even stronger pricing for fertilizer because of the feedback we're getting in the world market that the world is utilizing more synthetic fertilizers, not necessarily that the US is, and that's what's creating the higher prices that we're seeing.

So the longer this goes, the more we are becoming a stronger, stronger price taker But it also creates an incentive for us to be as efficient as possible with the nutrients we do use.

Shay

Foulk: Now, Lewis is saying, "Shay, you need boron, you need zinc." How much do any of those micronutrients— is much of that from U.S. production? I'm not as familiar with that, or is that coming from outside markets as well?

Dr.

Chad

Hart: A lot of those would be outside markets as well. So you can figure anything on the nutrient side, there is an active global trade.

Shay

Foulk: Interesting. Lewis, uh, final thoughts here from what you're seeing at the farm gate, or just what you want to leave listeners with, uh, thinking about fertilizer here through the end of the year?

Lewis

Stearns: Make your plan off of good data. Don't just go off of what you're hearing on podcasts and videos like this. Every area is different, every operation is different. Look at your own data, work with your trusted advisors. If you don't have one, get one, talk to people, you know, ask me questions, whatever we can do to help out. But just, there's still too many decisions made based on what the neighbor said, or, uh, you know, what's in the marketplace, and everybody's different. So just make sure you're using data to make your decisions.

Shay

Foulk: And, and along that data, my parting thought is, you know, run your budgets, figure out what your numbers are. And, and this is a concept I've been talking about here for the last couple weeks of, we've gotten to the point where it feels like we have a cost of production and in reality you're producing your cost. And, you know, people will push back on that and they'll say, well, Shay, I can't control my land or I can't control— okay, well, what can you control? You can control your timeliness, you can control your budgets, you can control what you're actually spending and what you're spending it on. Those are actionable decisions. And, you know, thankful for people like you, Dr. Hart, that have been watching this for so long, put the information together, give us some perspective.. And then again, like a trusted advisor with Lewis, uh, to put these decisions together.

So guys, I really appreciate the discussion. Um, Dr. Hart, if people want to see any of the work that you've done there, what's the best way for them to look that up?

Dr.

Chad

Hart: Google my name. Yeah. So the idea is if you Google Chad Hart, I put every presentation I ever do online. And so all the slides I've ever used, including the fertilizer slides we've sort of been discussing here, they're already out there online. And so. You can sort of see the picture we're seeing when it comes to not only cover what's happening in the crop market, but also looking at inputs like fertilizer and saying, here's sort of the global general picture that's helping influence what you see in your local prices.

Shay

Foulk: Well, thank you for posting that. And Lewis, if anybody wants to reach out to you, they can just shoot you a text message or send you a Snapchat, right?

Lewis

Stearns: Yeah, our website, progressivecrops.com, or 419-889-2254. Text me.

Shay

Foulk: Sounds good. Hey, thanks a lot, guys. Really appreciate the time.

Dr.

Chad

Hart: Thank you.

Shay

Foulk: And thank you everyone for listening to another episode of the Ag View Pitch. We will catch you next time.