Weekly Fertilizer Review
Published on: Aug 3, 2015
Nitrogen prices continued to move lower last week on retail markets, reflecting cuts earlier in wholesale benchmarks. With commodities depressed by weak global financial markets, growers should make sure they're getting good deals before locking in costs for 2016 crops.
Ammonia prices remain steady at retailers in the central Corn Belt, but more dealers on the Plains are posting offer sheets with significant cuts from previous levels. Prices out west are now down to the $570 to $615 range, reflecting terminals that are running around $542.50, which was actually up $5 last week. Midwest terminal prices are only slightly higher at $555, following the $175 reduction in the index at the Gulf over the winter, but USDA continues to report average costs above $700 in Iowa and Illinois. The average across the country was down $12 this week to $641 in that very wide range, about $20 above projected fair value. Fundamentals continue to suggest even lower prices if the corn market can't rally, with that range down to $547 to $601. The Gulf index was flat for August at $460.
Urea was down another $5 last week, with average retail costs below $450 as whole markets internationally remain soft due to weak demand. India has been the only notable buyer of late but Iranian supplies are now joining Chinese offers on the market, helping take the Gulf index down to $280. Based on that cost, retail prices should be running around $430 or less, with fundamentals pointing to even weaker levels. Updated offer sheets on the Plains are running around that level at $425 to $445, while river markets have cut costs to $320 to $330. Swaps are mostly flat into winter as the wholesale market tries to stabilize.
UAN also appears to be stabilizing on the wholesale market, with the Gulf index for 32% down only $1 last week to $206.50. That suggests a retail cost for 28% around $285, but most retail prices are well above that level, keeping our average at $312. The swaps market at the Gulf is steady to slightly higher through winter, suggesting the market believes more farmers may turn to spoon-feeding to cut costs in 2016.
Phosphates were down only slightly last week, with the average for DAP at $550. That's actually in line with the current cost at the Gulf, which crept $3 higher to $434.50 in a market that is edging towards the top of its price range over the last year. While fundamentals and lower nitrogen costs point to lower prices, a quiet market internationally has remained very resilient. Swaps show a $20 decline into November, however, suggesting patience may be needed.
Potash was steady on wholesale and retail markets last week, with volatility on world financial markets, especially currencies, keeping buyers sidelined. Retail prices in the U.S. has been flat despite a $50 break this year on wholesale markets. While the retail average price remains above $480, terminal prices suggest fair value is really closer to $445. Fundamentals project even further cost cuts are justified but the complex resisted that market rationale this year.
