Friends In Low Places? Crop Input & Farm Decarbonization Is Only Sustainable If Commercial, Low Prices Deter Transition

Global Agriculture Report

Friends In Low Places? Crop Input & Farm Decarbonization Is Only Sustainable If Commercial, Low Prices Deter Transition

Key Findings

• General Thoughts: The decarbonization of crop inputs and related sustainability efforts play a vital role in the global decarbonization of agriculture; however, input supply growth/low prices also favor a less robust farm transition.
• Supply Chain/Inputs: We discuss US (and global) fertilizer prices, as regional premiums, which tend to be inland in the US near demand centers, are now under the microscope as farmers seek cost relief amid lower YoY income.
• Biofuels: We discuss the GEVO acquisition of a low-carbon US ethanol complex and the recent decline in US ethanol margins following mid-year highs, which we think will persist into yearend. We also flag a few SAF growth projects.
• Sustainability/Transition: We highlight the crop input market as playing a major role in global decarbonization efforts, the announcement of several low-carbon fertilizer projects, and the higher prices needed to spur change.
• Downstream/Other: We discuss the latest USDA crop market reports. Though the US corn and soybean harvest is still in its early stages, many weather-related harvest risks recently noted in the news appear to be overblown.

Exhibit 1: Most US corn belt nitrogen-based fertilizer prices reflect premiums to USGC and Ex-US prices, as shown by UAN32 in this exhibit – if these premiums drop amid more US gray supply, it could limit farm decarbonization efforts.

Source: Bloomberg, C-MACC Analysis, September 2024, mt= metric ton

See the PDF below for all charts, tables, and diagrams