Actual plantings will be influenced by fertilizer prices and availability this spring. In irrigated corn areas of the Southwest, high costs of natural gas for irrigation may cause some shift from corn to grain sorghum and soybeans. However, acreage impacted in that region is relatively small compared with the amount of corn planted in the Midwest. These markets can be very emotional in times of strong demand or tight supplies. That has been the case this winter with both natural gas and nitrogen fertilizer, two closely related markets.
Natural gas is the basic feedstock for producing nitrogen fertilizer.
It is not unusual for markets to overreact on the upside under such conditions. February natural gas futures on the New York market as of Feb. 1, had fallen 36 percent from the early January high. Prices on the April natural gas futures contact at the peak in January were about 30 percent lower than corresponding prices on the February contract. Even so, April futures prices have declined by 24 percent since the peak. Natural gas prices on the April contract at this writing are about 18 to 20 percent higher than in late October.