While winter's lingering grasp is delaying demand for spring application fertilizer it's also threatening to create havoc with suppliers once the weather clears. The slow pace of shipments by rail and barge could delay availability of stocks compounded by a shorter window for putting nutrients on. Making sure you'll have what you want when you need it at a price you can afford isn't getting any easier, though the winter rally in grain prices is making affordability at least a little easier.
Ammonia prices remain very quiet on wholesale markets, with retail demand buried under snow. Terminals are stuck at $515 in the west and $555 in the east, with updated retail costs on the Plains running $550 to $565, keeping dealer margins at the low end of their typical range. The rally in December corn has added $10 or more to the fundamental value of ammonia, which in running from $585 to $615. Based in the wholesale market the fair value of anhydrous is around $620 nationwide, in line with the typical Corn Belt cost.
Urea prices were mixed on the international market, with no impact seen yet on prices out of Ukraine. The Black Sea index was down around $7 a ton last week, with swaps unchanged on Monday, even though Russia has disrupted gas shipments to the country before and could do so again. Ukraine has a large unpaid gas bill, over and above the tense political situation. Costs at the Gulf were up slightly to $424, but overall the market appears to be ready to ease into spring. Swaps show the Gulf at $381 for April, with July down to $312.50. That's cold comfort at the farmgate level, where prices are still catching up as dealers restock. New offer sheets on the Plains were $520 to $560 this week, with fair value based on wholesale prices around $555. Fundamental value is around $30, but the international market remains overvalued.
UAN stabilized this week after rising over the winter to catch up to urea, with signs pointing to lower wholesale costs into spring and summer. The Gulf stayed at $295 for 32%, with April $287.50 and June at $235. Retail costs are still edging a little higher, with costs this week on the Plains resetting to $320 to $335 for 28%. Current fair value based on the wholesale market is around $360, with fundamentals $10 higher than that, suggesting prices could stay firm at the retail level, especially if a squeeze on nitrogen develops this spring.
Phosphates eased at the Gulf finally this week, after rallying almost $175 for DAP over the fall and winter as supplies tightened. Lower subsidies in India could weaken the market internationally, but that won't do much good right away for farmgate prices. Wholesale prices are moving higher for DAP, with DAP and MAP costs following suit at the retail level. Fundamentals and wholesale markets point to fair value between $568 and $583, in line with updated offer sheets on the Plains this week.
Potash was steady at the Midwest terminal market this week, sticking to $360, pointing to a fair value retail price around $443. Retail costs are edging higher than that in some areas, as local supplies tighten and new arrivals are iffy. Fundamentals point to lower costs, but that may not occur until after the spring buying season is over.
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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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