Fertilizer Part 2

I got some great replies from the linked post on fertilizer. I would now like to expand the discussion on the market impact of Natural Gas prices, it’s effect on fertilizer production, and the directionality of grain prices in the coming year.

Natty is soaring and is one of the main components of producing nitrogen fertilizer. With prices so high many fertilizer companies have had to stop production of nitrogen based fertilizer. I believe that a combination of high NG and low production will create a demand squeeze for spring planting season around the world. This could result in several different scenarios 3 or which can be applied to most grain markets and the 4th to oilseed.

SCENARIO 1:

High prices and high demand will lead to less planted acres due to unsustainable overhead. Bullish grains

SCENARIO 2:

Same planted acres or more but lower yields based on lower fertilizer usage. Bullish grains.

SCENARIO 3:

Same planted acres or more and farmers pay up for required fertilizer and the harvest is great. Bearish grains and bearish farmland due to bankruptcy.

SCENARIO 4:

Farmers switch crops to a less nitrogen fertilizer intensive crop. An example of this would be canola, which requires less fertilizer per acre than soybeans and the resulting oil is interchangeable with soybean oil. Bearish canola bullish soy.

Thoughts?