Farmers looking to lower taxable income for 2013 by prepaying fertilizer purchases should find attractive prices compared to the last two years. Average costs for N, P and K are running $100 to $200 or more cheaper per ton. Dealers changing prices last week were cutting offers again, though international benchmarks for urea and phosphates moved higher.
Ammonia was steady at the wholesale level last week, with retail costs close to fair value at some locations. Wholesale costs in the west stayed at $532.50, with eastern terminals $20 higher. The lowest retail prices on the Plains are around $575, with USDA putting the average in Illinois last week at $681, with the low end of the market at $650, $20 above the cheapest price in Iowa. Current fundamentals suggest a range of $565 in the west to $627 or so further east in the Corn Belt.
Urea prices surged higher last week, with several increases seen before wholesale markets ended firm. Gulf prices finished at $331.45, more than $50 off fall lows. Black Sea costs were up almost $10 to just under $300. Terminal prices along the Mississippi River followed suit, jumping $25 a ton to reflect the increase seen downstream in November. That's putting fair value retail prices around $450, with fundamentals pointing a little higher, making retail prices look cheap right now. Average retail price in the Midwest are running around $420. USDA put the average in Illinois at $424, with the low end of the market there $406. Swaps into spring are running $10 to $15 higher than the spot at the Gulf, getting retail prices much cheaper may be difficult.
UAN followed urea higher on the wholesale market, rising $7.50 a ton to $240 for 32%. Swaps into spring are $10 to $17 higher, in line with gains seen in urea. Prices were flat at river terminals, with retail prices firm, averaging around $325 for 28%. That's less than $10 above the fair value indicated by current wholesale prices, but fundamentals suggest a range of $275 to $295, which is in play for the lowest offers on the Plains. Those are running around $285.
Phosphates followed nitrogen higher in the wholesale market, but retail prices are still adjusting lower to reflect the big drop in prices seen this fall. As a result, DAP at the Gulf was up $7.50 a ton to $337.50, but retail and terminal prices eased. Updated offer sheets on the Plains dropped DAP more than $20, with the low end of the market there $440 to $480, which was also the low end of the market in Illinois last week, according to USDA. Our fair value for retail is $452 to $462, based on wholesale costs, with fundamentals suggesting the market should be at $422. Swaps into the end of winter show only modest increases from current levels.
Potash prices keep on grinding lower, as the market waits to see what how good a deal big international buyers like China will negotiate after the chaos in the market this year caused by the breakup of the Belarussian cartel. The Midwest terminal price eased another $2.50 to $370, which suggests fair value is $457, close to the $454 indicated by current fundamentals. Retail prices continue to move into that range or even a little cheaper. More prices on the Plains are running $450 to $460, with USDA putting the low end of the market in Illinois at $441.
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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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