Weekly Fertilizer Review
Retail fertilizer prices fall as market watches turmoil
Published on: Aug 24, 2015
Though some in the international fertilizer business are stepping back from deals in response to chaos flowing through global financial markets, U.S. growers continue to see lower prices as more dealers reset their offer sheets. And while the outlook is murky thanks to the China meltdown, there are a few hints prices for some products could begin to edge higher soon.
Ammonia prices worked lower again last week on retail markets, with our average falling $3.50 to $634.50, though that figure masks a large range still evident regionally. Quotes on the southern Plains remain mostly $560 to $615, in line with the $589 target suggested by current fundamentals of supply and demand. But further east prices are still much higher, though they're starting to reset lower too. USDA pegged Illinois at $685 for fall, though the low end of the selling range was $614, close to the $610 target fundamentally in the Midwest according to our models. Wholesale expenses remain steady, putting the Gulf index at $417 and terminals at $5420 to $555. But where the market goes from here is uncertain. A few plants will be down in the Corn Belt into harvest, while the trade is betting farmers will still be buying this fall despite the drop in prices. Supplies are getting a little tighter internationally, which may also tend to firm costs into the fall, though lower phosphate production in the U.S. could free up more ammonia.
Urea costs also edged lower again this week, with the average around $435.50, down some $2.50 from last week. Offer sheets on the southern Plains continue to run $380 to $415 mostly, with USDA's Illinois survey showing prices coming down below $455 on average, with the low end of the range down to $375. Wholesale prices continue to point to prices around $420 to $430, with fundamentals around $395, so the market is pretty fairly valued. Overall interest appears slack both in the U.S. and around the world, but there are mixed signals from that quiet market. Big sellers like China appear to be holding firm of their prices, at least for now, though international supplies could pick up toward the end of the year. That attitude is reflected in the swaps market, where the Gulf is trading $20 lower for December contracts.
UAN is still following the rest of the nitrogen complex, slipping around $1.55 on average, which puts the cost of 28% around $304.25. While some offer sheets on the Plains are down to $265 to $280, current wholesale costs suggest fair value of $285 with fundamentals at $280. The swaps market projects a $10 drop into winter, with the cost of 32% running $210 at the Gulf.
Phosphates show a big softer tone, but the complex continues to be the quietest part of the nutrient market. Average retail costs for DAP slipped almost $1.50 to around $549.50 while the cost of the Gulf was down $5 to $429. River terminals also edged lower, but business is slow. Swaps point to a $20 break in prices by November/December, but that would still leave costs most places above the $490 level forecast by fundamentals. Fair value based on wholesale costs is running around $530.
Potash prices dribbled lower again last week as the slow drip downward in the nutrient continues. Our average cost is around $473, down $1.25, but dealers resetting prices are below that. USDA put the Illinois average at $458, with recent offer sheets on the Plains running $415 to $445. Midwest wholesale prices slipped to $340, which puts fair value around $100 higher on average. Fundamentals indicate a cost around $430.
