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Weekly Fertilizer Review

Last week we reported a big price drop on the Plains that took ammonia below $700. Other forms of nitrogen, including urea, continue to drop at international benchmarks, though retail prices this week appear very quiet.

Ammonia prices appear stable, with few new offers surfacing after the big drop earlier in June. In fact, anhydrous remains stubbornly high in many areas. USDA reported the average price in Iowa unchanged at $882, with the cheapest in that survey $845. That contrasts to the $680 offered last week out west, though most offer sheets there are still $740 to $785. Gulf prices at $512.50 and Black Sea at $453.50 suggest fair retail value is $760 to $790, but fundamentals still support the lower prices, with the projected range based on supply and demand at $660 to $725. Ammonia inventories headed into spring were below 2012 levels despite strong acreage, with dealers resistant to stockpile and supply problems still present at overseas manufacturers. Longer term, farmers' reluctance to buy this year internationally despite high crop prices, as well as a flurry of proposed projects, has some ventures being shelved for fear of creating a glut.

UAN prices dropped again this week, falling another $11.50 at the Gulf to $245 for 32%. The market is now $92.50 lower than spring highs, a drop of more than 25%. There's no indication that prices through summer will get any stronger, with last trades reported for swaps another $12.50 cheaper. USDA's surveys reported steady prices on the East Coast, with the Iowa average still at $382.50 for 28%. Current fair value is down to $321, with some retailers down to $350.

Urea continues to grind lower on international markets, but swaps for summer and fall delivery are starting to firm. The current price at the Gulf, around $315, is more than $120 below the winter high, while the Black Sea is down to $286. Both benchmarks are at their lowest level since Sept. 2010, with retail costs starting to show signs of discounting to projected fair value in an oversold market. Fair value is around $470, but costs on the Plains are already below that in some areas, falling as low as $435. USDA put the average price in Iowa much higher, at $585, close to the cost in South Carolina as well.

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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.