DEVELOP A FERTILIZER PRICE FORECASTING MODEL TO ASSIST WITH FARM MANAGEMENT DECISIONS

Fertilizer is critical to modern production agriculture. The primary components of fertilizer, nitrogen (N), phosphorus (P) and potassium (K) provide crops the nutrients required to achieve optimal production. Across all types of U.S. crop farms, fertilizers account for roughly 20 percent of crop production expenses. Over time, fertilizer prices have been quite variable. Farmers typically order or book fertilizer needs in the late fall well in advance of planting or wait until closer to planting. The decision to book fertilizer in advance verses buying when needed is a business management issue for many farmers. This study uses a vector autoregression model to forecast fertilizer wholesale fertilizer prices. A decision analysis for two purchasing strategies that test seasonal changes of fertilizer prices is explored. Finally, a price wedge is added to two regional forecasts to reflect retail fertilizer prices. The price forecasts show that fertilizer prices have decreased in the last six months and will continue to remain steady in the near future. Results of the decision analysis did not indicate that there were seasonal changes between months