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(This story appears as part of a special package highlighting the global potash industry.)
* Farmers testing soil before buying fertilizer
* Late harvest could squeeze autumn demand
* U.S. shift from soy to corn could boost potash demand (In U.S. dollars unless noted)
By Rod Nickel and Michael Hirtzer
WINNIPEG, Manitoba/CHICAGO, Sept 22 (Reuters) - Around Ron Bonnett's farm near Sault Ste. Marie, Ontario, farmers are busy making complicated calculations to determine how much to spend restoring soil nutrients for next year's crop.
The decision must take into account grain, fertilizer and crude oil prices, as well as farmers' delicate give-and-take relationship with the land. But it may ultimately rest on the fate of this year's crop.
"If you haven't got the crop in the bin, or crop sold, it could be difficult to buy the (fertilizer) product," said Bonnett, vice-president of the Canadian Federation of Agriculture. "To put it in one word, 'uncertainty' is the best way to describe it."
North American farmers cut back on fertilizer purchases last autumn as the price of potash, one of the most valuable crop nutrients, nosed up to a record $1,000 a tonne.
Forecasts for North American demand this fall and next spring are as variable as the weather forecasts. Cool weather earlier in the year delayed the harvest in Canada and the United States, raising concerns that frost will wreck crops before farmers can harvest them.
Those fears have ebbed in recent weeks with warm, dry weather.
But that uncertainty means farmers are looking warily to next year's crop, Bonnett said. More Canadian farmers than usual are testing their soil, trying to determine how little fertilizer they can get away with applying this fall, he said.
"There's some core demand there, but I think farmers are cutting it to the bare minimum."
U.S. farmers are also looking to save money on fertilizer, said an industry source.
"These farmers have overapplied potash for many years. Generally, they'll put on the minimum possible."
Farmers are happier with the current potash price of $460 a tonne than they were with prices a year ago. Most realize they can't cut back on potash indefinitely without hurting their crop yields, said Craig Orr, director for market development at Heartland Co-op in Des Moines, Iowa.
Autumn demand could prove strong if farmers escape a crop-killing frost and if fertilizer prices weaken further, said David Asbridge, president of St. Louis, Missouri-based NPK Fertilizer Advisory Services.
"I think farmers are going to be feeling a bit better," Asbridge said, adding that grain prices remain relatively high despite a recent decline.
"We're going into a fall season with the opportunity to do much much better (fertilizer sales) than last year.
Asbridge sees farmers shifting U.S. soybean acres to corn next year if big oilseed crops in the United States and Europe, and renewed South American soybean plantings, put soybean prices under pressure this autumn. More corn typically means a need for more fertilizer, he said.
But if farmers harvest a record corn crop and the grain's price sinks, some may limit input costs, Orr said.
This month, Citigroup lowered its rating on two big North American fertilizer producers, Potash Corp of Saskatchewan (POT.TO) and Mosaic Co (MOS.N) to "hold" from "buy." It cited the likelihood of limited fertilizer applications among its concerns [ID:nN14501206] and analyst P.J. Juvekar said U.S. corn belt farmers are cutting spending as corn prices fall.
The smaller crops forecast for Canadian farmers could also limit the rebound in potash demand next year, Asbridge said.
"If you're not taking much off the land, you don't have to put as much (nutrient) back on it," he said.
Rising prices for light crude CLc1 could also have an impact, with higher fuel costs limiting how much farmers could pay for fertilizer.
On the other hand, higher crude supports corn and oilseed prices because they are used for biofuels, so farmers in theory could afford to pay more for fuel, Asbridge said. (Editing by Frank McGurty and Janet Guttsman)