Weekly Fertilizer Review
Planting rush doesn't alter fertilizer dynamics.
Published: May 21, 2013
Farmers took giant steps towards getting caught on planting spring crops last week, but the record acreage seeded doesn't appear to have changed the rationale of prices in the fertilizer market. Dealers appear to be still filling orders off existing inventory. That's keeping prices from any significant price gains in most areas but also means producers can't take advantage of lower costs on wholesale markets this spring.
Ammonia appears steady for most producers, after pullbacks in a few retail markets. Prices on the Plains have stabilized with $780 the new normal, but costs to the east in the Corn Belt remain much higher. USDA put the average cost in Iowa steady at $882 this week, $100 or so above the fair value level suggested by current wholesale charges. Ammonia inventories were moving higher this winter, but remained in a long-term downtrend off the high levels that broke prices in the wake of the financial crisis of 2008-2009.
UAN looked for a while like it might become the nitrogen of choice due to late planting, but farmers found time to keep applying ammonia instead. Spot quotes at the Gulf finally reflected weaker summer contacts and dropped sharply to $270, $47.50 below earlier levels. Current fundamentals suggest a price around $355, and that Gulf index price would put the cost even $20 lower, close to where USDA reported the cost in South Carolina this week. Most other retail prices remain higher as inventory bought earlier is worked off. USDA reported the price in Iowa this week still at $382.50 for 28%, with quotes on the Plains still running $360 to $420.
Urea is showing signs of bottoming after a huge drop on international markets over the winter and spring. Prices were mixed for benchmarks: the Black Sea was up a couple bucks to $314.75, but the Gulf slid $3 to $322.50 and quotes out of the Middle East were also weaker. Summer quotes are $5 higher at the Gulf, however, though the Black is still lower than the nearby. Current benchmark prices and fundamentals suggest a retail fair value around $510, in line with quotes on the Plains. USDA put Iowa at $565 and South Carolina $610,
Phosphate prices were steady for DAP at the Gulf at $421, with adequate inventories this spring keeping prices subdued. While fair value based on wholesale costs is around $525, retail prices in Iowa and South Carolina surveyed by USDA this week were around $655, costs on the Plains were down to $590 to $605. MAP in Iowa was at also at $655, with the Plains at $615 to $630.
Potash remains mostly soft, though retail prices were mixed. USDA reported Iowa down $30 to $595, with North Carolina at $612.50 and South Carolina at $605. Updated prices sheets from the Plains were in the $540 to $565 range, with the bottom of the range close to our projected fair value of $530.
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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.
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Tagged: usda, Corn Belt, farm management