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Weekly Fertilizer Review

Ammonia prices surge higher

Published on: Apr 7, 2014

Price increases for ammonia continue to work through the supply chain as farmers try to get started planting corn, with unrest in Ukraine and uncertainty about how many acres farmers could plant this spring in the U.S. keeping the market unsettled. While USDA's March 31 report appeared to show total acres for all crops falling, Farm Futures survey indicated farmers wanted to increase plantings by more than 4% overall.

Ammonia prices posted another round of increases, with some retail outlets fully matching the $105 increase seen on wholesale markets over the last couple of weeks. In addition to higher expenses, questions remain about availability because the supply chain remains stretched by lack of rail capacity and a delayed start to the shipping season on northern stretches of the Mississippi River. With Midwest wholesale costs running from $605 to $660, average retail prices in Illinois last week topped $700, according to USDA's survey. Updated offer sheets on the Plains aren't quite that pricey, but they still range from $600 to almost $700, with some costs up $125 in just a couple of weeks. Those costs still haven't caught up with the wholesale market, suggesting more increases are possible, with fair value now topping $770. Uncertainty about supplies out of the Black Sea could be an issue. Russia is increasing costs dramatically for Ukraine, which shut urea plants to focus on ammonia and is trying to arrange imports of natural gas from Europe. While gas costs in Europe are down significantly, feedstocks are still twice as expensive as in the U.S.

Urea prices edged lower on international markets, though costs here in the U.S. haven't fallen as much as elsewhere. Indeed, while terminal prices are easing a little on the Mississippi River as traffic reopens, retail costs are steady to higher this week. Urea on the Plains is now quoted at $530 to $575, close to the range also seen in Illinois, where the average was just under $545, according to USDA. The current price at the Gulf, just under $400, suggests an average retail price of $525, with fundamental projections averaging around $15 lower than that. Swaps out of the Black Sea show only a modest break through summer, but contracts at the Gulf for August are $90 cheaper than the current index.

Download the complete report, including information on UAN, phosphates and potash, using the link below.

Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Advisor. He conducts Farm Futures exclusive surveys on acreage, production and farm management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key farm crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.


Download file: WFertR040714.pdf
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Created: 04/07/2014 03:12 PM
Last Modified: 04/07/2014 03:12 PM
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Comments:
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  1. Joseph Paniello says:

    It is going to be very difficult to make a profit this year. I believe with more supply than demand, it signals a huge problem. I am glad to hear fertilizer is less expensive.

  2. Anonymous says:

    Bryce, I give you heck on the grain markets but this info is very helpful. Just locked in 290.00 28% and I am content and can work with that. A long diserved thanks.

  3. Anonymous says:

    hey please add in urea, ammonium sulfate, k mag, potash to your fertilizer listing..i'm in north Carolina and sc port prices help keep my few fertilizer suppliers in check. we have wide spread nematode and wireworn problems this year as farmers stopped using counter few years ago to combat pigweeds with calitso products...now people freeking with hideous looking corn..state agronomist says throw 100lbs k mag, nitro, bioforge..some knifing in uan at 1.5 to 2 times rate others broadcasting urea, ammonium sulfate, k mag, &or porash..better yet spray with gramoxone and atrazine, rip & replant with counter

  4. shar says:

    I would like California Farmer to publish California retail prices. Interested in ton price for the granular 16-20-00 for pasture that comes in the 50 pound bags.

  5. Anonymous says:

    Hi Bryce, excellent reports. Have you considered producing such material for south american growers? Cheers

  6. badr of www.w-tb.com says:

    the Fertilizer prices well be down in 2 months

  7. Anonymous says:

    Bryce, I am a converted cotton to corn farmer in S. Ga and no fertilizer sellers store ammonia on site in my area. I have on farm storage and have to buy directly from the port in Tampa. Is there anywhere a daily price for ammonia trade can be found so I know if this is a good deal or not? Thanks for teaching an old dog new tricks..

  8. Anonymous says:

    USDA report links: http://www.ams.usda.gov/mnreports/GX_GR210.txt http://www.ams.usda.gov/mnreports/NW_GR210.txt -- Bryce

  9. Anonymous says:

    Bryce, throughout this report it states that 'USDA reported' this and that, could you lead me in the direction of where I can find some of their statements? I'm mainly interested in ammonia. Kind regards

  10. Anonymous says:

    and about P e K?

  11. Anonymous says:

    needs to be a site that post uptodate prices so farmers can get a better deal

  12. Anonymous says:

    Sorry to post this explanation so late, but just noticed the question from NY farmer. I provide three types of price information. First are the benchmark prices used internationally, out of the Black Sea, Middle East, Gulf, etc. Some of these prices are from actual trades, others will be for indexes used to settle swaps contacts. Secondly, I look at retail prices paid by farmers. These vary widely by location. Finally, I make projections of what "fair value" is currently for retail prices, based on the international market. In otherwords, if your dealer is buying fertilizer now, say, from the Gulf or out of the Black Sea, what would the normal cost to you be. This fair value price lets you decide if your local market is under or over valued. -- Bryce

  13. Anonymous says:

    Dear, the file of the link is one week old. If possible, please, change to the new one, thanks, Nelson

  14. nyfarmer says:

    New to this site, great info, thank you! Need help reconciling fert price data in today's WFR: Staff notes, "If [ammonia] is imported to the U.S. it could cost $475 a ton, $75 more than the current index price at the Gulf. Normally, this type of cost at the Gulf, $400 a ton, would mean $570 at the farm gate level, while the Black Sea cost would translate to $700 a ton." These two sentences seem wrought with contradiction: Black Sea Am imported to US could cost $475//$75 more than index//this ($400) cost at Gulf would mean $570 at farm gate//BSea cost translates to $700 a ton: so, my questions: i) what does the index measure, raw price of undelivered Ammonia?; ii) difference between Gulf "cost/price (??--seems to be used interchangeably) and farm gate is transportation expense?; and iii) and why would BSea cost translate to $700/ton if differential from Gulf index is $75, should be $75 more than the $570 price at farm gate Staff cites? I know my questions are due to my ignorance, but the data appear contradictory. Many thanks.

  15. Anonymous says:

    I own several business beside the farm i run. I wish i could price everything i sell to the price of corn and beans?!? Can anyone say "price fixing" ? i thought that was illeagal?

  16. Bryce says:

    Sorry to take so long responding. $5 corn translates to $685 ammonia, $525 urea, $665 DAP, $685 potash, given what we know about demand.

  17. Anonymous says:

    What do your models suggest when using $5 corn and $10 beans?