Material Insights · Understanding the Material World

Maize and Nitrogen (ammonia)

Maize is one of the most nitrogen-hungry crops, and fertiliser is the largest direct cost of growing it, so grain prices and nitrogen prices share a yearly cycle driven by planting decisions.

Maize (commodity) and Nitrogen (ammonia) (commodity): 3 relationships.

How they are linked

1. Nitrogen for maize

Physical flow · Strong · Nitrogen to maize

High-yield maize needs large doses of nitrogen, mostly as ammonia, urea or UAN, which is why maize planting sets a big share of nitrogen fertiliser demand.

  • about 152 lb per acre US nitrogen applied to corn, 2024 trend estimate (about 170 kg per hectare)

Soybeans, by contrast, fix most of their own nitrogen, so a shift of acres from soybeans to maize raises nitrogen demand. Application rates per acre change slowly, so nitrogen demand moves mainly with maize area.

Sources: University of Illinois, farmdoc daily

2. Fertiliser cost share

Cost and price · Strong · Nitrogen prices raise maize costs

Fertiliser is the largest direct cost of growing maize, so high nitrogen prices squeeze farm margins and can push planting towards crops that need less of it.

  • about 45% fertiliser share of total direct costs for corn, 2000 to 2024
  • about 30% fertiliser share of direct costs for soybeans

The gap between the two shares is one reason US farmers shift towards soybeans when nitrogen is expensive. It also means nitrogen price spikes feed into the cost of feed grain.

Sources: University of Illinois, farmdoc daily

3. Price link: crop demand

Cost and price · Moderate · Both ways

Strong grain prices encourage more maize planting and heavier fertiliser use, but buying is seasonal and planned ahead, so the link shows up over a year rather than a month.

  • 0.06 monthly change correlation
  • 0.60 12-month change correlation
  • 0.95 fitted elasticity

Nitrogen leads maize by about a month in the site's data. Gas prices drive nitrogen costs too, so an energy shock can lift nitrogen without a matching move in grain.

Sources: Material Insights (World Bank, FRED, IMF data)

For investors

Key learnings

  1. Maize area is a key driver of nitrogen fertiliser demand, so planting intentions in the US and Brazil are a demand signal for nitrogen producers.
  2. Fertiliser is about 45% of maize direct costs, so nitrogen price spikes squeeze grain margins and shift acres to soybeans.
  3. The price link is yearly, not monthly: watch the corn-to-nitrogen price ratio ahead of planting.

What to track

  • Corn price to anhydrous ammonia or urea price ratio: Affordability of nitrogen and likely application rates (Fortnightly · USDA AMS Iowa Production Cost Report)
  • USDA prospective plantings: Maize acres and so nitrogen demand (Yearly, March · USDA NASS)

For policymakers

Key learnings

  1. Maize expansion, for feed or ethanol, raises nitrogen fertiliser demand, so ethanol policy has a fertiliser cost.
  2. Better nitrogen efficiency in maize lowers both import bills and emissions.
  3. Rotating maize with legumes such as soybeans or pulses cuts its nitrogen needs, since legumes fix most of their own.

What to track

  • Urea sales by crop season: Fertiliser demand linked to maize area (Monthly · Department of Fertilizers)
  • Maize area sown: Change in nitrogen demand (Weekly in season · Ministry of Agriculture)

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. farmdoc daily, 29 May 2025: nitrogen fertilizer use and efficiency, University of Illinois, farmdoc daily (2025)