Weekly Fertilizer Review
Patience may lower nitrogen costs
Published on: Jun 26, 2015
Growers scrambling to find nitrogen for applications disrupted by flooding are facing higher prices as June ends. But there's hope costs could begin to head lower soon if rallying crop prices don't upset potential for price breaks.
Ammonia costs were steady this week with the average retail price running around $670 in a range from $630 to $730. Wholesale prices were also little changed around $560 to $600. While current retail prices fail to reflect the drop in values seen internationally this spring, initial bids for fall bookings are starting to come in with significant savings, as much as $100 below the spot market. That could begin to bring the market back in line with fundamental values, which show prices in the $570 to $620 range at the retail level.
Urea prices shot higher again this week, with the average retail charge up $6 to $460.50, as dealer charges reflect the big spring rally on the wholesale market. Recently updated offer sheets are running in the $465 to $480 range and our forecast fair retail value now is even higher at almost 390. Upriver terminals shot up $15 to more than $30, suggesting higher costs in the short run. However, the Gulf index was steady at $343.50 and swaps for July are sharply lower, just below $300. That could knock retail prices back below $440, with fundamentals pointing to lower prices still. International demand is starting to soften as India wraps up purchases and Brazil struggles with high costs inflated by its weak currency.
UAN were firm on retail markets this week as growers debated whether they could risk sidedressing with more rain in the forecast in many areas. While retail charges for 28% averaged just under $320, costs for 32% at the Gulf slipped, and swaps suggested a further decline was coming into summer and fall. That could take retail prices back down to the $285 level suggested by current contracts.
Phosphates were choppy again last week, with little change seen this late in the season on the retail market. The average cost for DAP stayed at just under $552, with wholesale costs mixed. The Gulf index for DAP firmed to $422.50 through July, with no much change in the swaps market into the fall. Fair value based on wholesale costs continues to run around $15 to $25 under current price levels, but international prices remain fairly strong as foreign growers continue to buy.
Potash prices fell again on wholesale markets, with the Midwest terminal cost down $5 to $362.50. That's $42.50 below its 2015 high achieved during the winter, but retail costs remain little changed, with the average around $483. Wholesale costs suggest retail prices should be around $30 cheaper, with fundamentals pointing to lower values still. The biggest news in a quiet market this week came from reports Canada's Potash Corp is trying to buy rival K&S, a German producer.
