When Farmers Make Money, They Get Gouged

WSJ, via Big Picture Agriculture:

Here’s a puzzle: How is it that fertilizer prices are so stubbornly high while the production cost has plunged? The answer lies in the Corn Belt — and it will boost fertilizer equities for the foreseeable future.
Anhydrous ammonia, a nitrogen-based plant food, now sells for nearly $700 a ton. That’s off from the highs of $800 late last year. But the biggest variable cost in making fertilizer, natural gas, has seen its price collapse. It’s off over half from $4.50 a million British thermal units in mid-2011. Natural gas for May delivery closed at $1.927 on the New York Mercantile Exchange Friday, down 2.7% for the week.
If that drop in input costs were passed through, farmers would be paying around $231 a ton for nitrogen fertilizer, according to an analysis of the historical relationship between gas and fertilizer prices by Kevin Dhuyvetter, a farm-management specialist at Kansas State University.
So what gives?
A combination of abnormally high corn prices and increased plantings is keeping plant-food costs elevated. Fertilizer products “have been more tied to crop prices than lower natural-gas prices,” says Jeffrey Stafford, a Morningstar analyst in Chicago. “So producers have been able to capture that wide margin.”

You know, that's just horse shit.