So, what effect do energy prices have on fertilizer prices? Not a lot, Bryant says, though the difficulty in manufacturing the products may play a role. Potassium, for instance, faces a “substantial barrier to entry into the market,” with a six- to eight-year lag time to get a new operation up and running.

“That results in production cycles that can lead to price hikes,” he says. The U.S. currently imports 80 percent of its potassium, mostly from Canada, but new capacity is coming online in North America.

Potassium prices hit historical highs in 2008, dipped a bit in 2009 “as the economy fell apart,” but ran back up in 2011. “The price is high because the demand is high,” Bryant says. Production cost doesn’t have much of an effect on prices, because “demand goes up as commodity prices go up.”

The phosphate outlook is similar to potassium, but not as bad, he says, with lower production costs and shorter lead time — three to four years — to get new production.

The U.S. produces a lot of phosphate, Bryant says, but also exports a lot, about one-third of production. New production is coming online in Morocco, Saudi Arabia and Brazil.

“High demand means high prices,” he says, “and we expect high demand to continue. A high correlation exists with the price of phosphate and the price of corn.”

Nitrogen production costs are tied to natural gas prices, which “vary according to location.

“U.S. ammonium production saw a significant drop from 2000 to 2006. From 2008 through 2010 net imports were declining. The U.S. nitrogen fertilizer industry is regrouping and rebuilding.” The U.S. is a low-cost producer, he notes, but “Russia is the lowest.”

U.S. nitrogen import and export rates currently “are steady.”

Also, as with potassium and phosphate, the price of nitrogen is closely correlated with the price of commodities. “With all three nutrients, demand is the story,” Bryant says.

He doesn’t expect fertilizer prices to drop anytime soon, “unless several conditions are met.” Those include continued low natural gas prices and reduced crop prices. An RFS waiver would have little effect, he says.

The bottom line for farmers and ranchers continues to hinge on close scrutiny of all inputs, including energy and fertilizer. Efficient use of nutrients and conserving energy when possible, as well as smart shopping, will be crucial for successful producers.