Changes to the Natural Gas, Corn, and Fertilizer Price Relationships From the Biofuels Era

Beckman, Jayson; Riche, Stephanie

doi:10.1017/aae.2015.22

Cited by 13 publications

(8 citation statements)

References 28 publications

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“…If N prices were 40% more, then the ending iNUE would be 9.0%. Since in the recent decade fertilizer N prices often track maize grain prices [ 24 ], the ratio of maize to grain prices remains relatively constant, and for our analysis, the 6.4% value would be typical for US maize production. This demonstrates how low iNUE is when full fertilization is at EONR and at common maize and fertilizer prices.…”

Section: Resultsmentioning

confidence: 99%

A new perspective when examining maize fertilizer nitrogen use efficiency, incrementally

et al. 2022

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For maize (Zea mays L.), nitrogen (N) fertilizer use is often summarized from field to global scales using average N use efficiency (NUE). But expressing NUE as averages is misleading because grain increase to added N diminishes near optimal yield. Thus, environmental risks increase as economic benefits decrease. Here, we use empirical datasets obtained in North America of maize grain yield response to N fertilizer (n = 189) to create and interpret incremental NUE (iNUE), or the change in NUE with change in N fertilization. We show for those last units of N applied to reach economic optimal N rate (EONR) iNUE for N removed with the grain is only about 6%. Conversely stated, for those last units of N applied over 90% is either lost to the environment during the growing season, remains as inorganic soil N that too may be lost after the growing season, or has been captured within maize stover and roots or soil organic matter pools. Results also showed iNUE decrease averaged 0.63% for medium-textured soils and 0.37% for fine-textured soils, attributable to fine-textured soils being more predisposed to denitrification and/or lower mineralization. Further analysis demonstrated the critical nature growing season water amount and distribution has on iNUE. Conditions with too much rainfall and/or uneven rainfall produced low iNUE. Producers realize this from experience, and it is uncertain weather that largely drives insurance fertilizer additions. Nitrogen fertilization creating low iNUE is environmentally problematic. Our results show that with modest sub-EONR fertilization and minor forgone profit, average NUE improvements of ~10% can be realized. Further, examining iNUE creates unique perspective and ideas for how to improve N fertilizer management tools, educational programs, and public policies and regulations.

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Section: Resultsmentioning

confidence: 99%

A new perspective when examining maize fertilizer nitrogen use efficiency, incrementally

et al. 2022

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“…However, there is no similar empirical evidence nor consensus in the literature regarding the effect of biofuel policies on fertilizer markets. Beckman and Riche (2015) find some evidence of a structural break between natural gas and ammonia prices in mid-2008. Additionally, Galbraith (2010) Second, our use of 2010 as the beginning of the posttransition period follows both market-based and empirical considerations.…”

Section: Defining Pre-and Posttransition Periodsmentioning

confidence: 97%

“…Our modeling strategy is to empirically assess the flow of price information within the US fertilizer market. The majority of previous papers examine price dynamics in US and international fertilizer markets (e.g., Hu and Brorsen, 2017;Beckman and Riche, 2015;Humber 2014;Galbraith, 2010). We use a similar modeling approach but assess price dynamics in spatially separated domestic US markets-New Orleans and inland agricultural production regions-based on the law of one price.…”

Section: Modeling Strategymentioning

confidence: 99%

“…Third, Bushnell and Humber (2017) estimate that a structural break between natural gas and ammonia prices occurred in January 2010. The three-year gap between 2007 and 2010 also provides an opportunity to evaluate corn price changes that occurred following the later structural break found in Beckman and Riche (2015) caused by biofuel policies enacted in the mid-2000s. This is particularly important because of well-documented agricultural commodity price volatility during the 2007-2010 period (e.g., Irwin et al 2011;Aulerich, Fishe, and Harris 2011;and Garcia, Irwin, and Smith 2014).…”

Section: Defining Pre-and Posttransition Periodsmentioning

confidence: 99%

“…Additionally, the data represent multiple inland production regions, which provides a natural experiment as some regions' corn acreage responses were differentially impacted by biofuel policies. This unique data set provides an opportunity to add to existing research on biofuel policies (e.g., Galbraith 2010;Beckman and Riche 2015;Etienne, Trujillo-Barrera, and Wiggins 2016;Bushnell and Humber 2017;Chiou-Wei, Chen, and Zhu 2019).…”

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confidence: 99%

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The Impacts of Biofuel Policies on Spatial and Vertical Price Relationships in the US Fertilizer Industry

Bekkerman¹,

Gumbley²,

Brester³

2020

Applied Eco Perspectives Pol

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Biofuel policies and concomitant market forces in the mid-2000s systemically altered US corn markets. Because corn production requires large nitrogen fertilizer inputs, those policies may have also impacted US fertilizer markets. We model fertilizer price relationships across US regions and leverage the natural experiment of biofuel policy intervention to show the secondary impacts on fertilizer markets. Longrun fertilizer price adjustments became faster and short-run price dynamics became more responsive to corn markets and less affected by natural gas prices. Additionally, regions where corn production significantly increased after the policies had a 10-20% increase in influencing the fertilizer price discovery process.

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Examining the factors of fertilizer pricing

Wongpiyabovorn,

Hart

2024

J of Agr & App Econ Assoc

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A strong surge in fertilizer prices in 2021 led farmers and policymakers to question the factors that drive fertilizer pricing. This study examines the relationship among natural gas, corn, and fertilizer prices, finding five structural breaks from 1997 to 2022. The pass‐through rates of natural gas and corn price changes to fertilizer prices show significant shifts after the passage of the biofuel mandate, with those changes fading as the market matured. Meanwhile, natural gas price changes are the main contributing factor in the latest period. However, the linkage among these prices continues to evolve and is likely to diminish over time.

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Changes to the Natural Gas, Corn, and Fertilizer Price Relationships From the Biofuels Era

Cited by 13 publications

References 28 publications

A new perspective when examining maize fertilizer nitrogen use efficiency, incrementally

A new perspective when examining maize fertilizer nitrogen use efficiency, incrementally

The Impacts of Biofuel Policies on Spatial and Vertical Price Relationships in the US Fertilizer Industry

Examining the factors of fertilizer pricing

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