Inputs Market Update: Composite Index Springs Higher

Posted on 03/09/2017 10:12 AM

UAN"Gains tallied $32.59 to Declines' $4.01 in the regional averages.

Nitrogen prices continued higher this week as P&K softened slightly. UAN gave us a nod to the downside last week which we viewed as an opportunity to fill spring/summer N needs and this week retraced a good 5 bucks higher. Missouri, Minnesota, Indiana and Iowa led UAN solutions higher with only Illinois, Wisconsin and Kansas falling.

After last week's price pressure on corn related to USDA's prospective plantings report, expected new-crop revenue swung sharply lower. This week, anhydrous ammonia firmed sharply, forcing NH3 above new-crop returns per acre. Since we do not believe NH3 will fall until after spring fieldwork, once again, the heavy lifting will be up to corn in setting that price spread right again. For now, thanks to USDA's 93.6 million corn acre projection, anhydrous is overpriced compared to corn.

PhosphateMAP and DAP posted scattered gains and declines but were lower overall. We expect price softness to continue in phosphate for at least a short time. Wholesale values are limiting upside potential on robust global stocks amid weak demand. Also limiting pressure on phosphates is the slowdown in preplant activities due to the weather.

Potash is still under pressure from bulging global stocks of its own and we stand by our advice to stay hand to mouth on potash and phosphate. We expect nitrogen to continue to firm through spring demand and to fall slightly through summer months into early harvest.

Farm diesel firmed in response to higher crude oil and heating oil futures, which have since retreated slightly. But farm diesel lags heating oil futures' price pattern by 1-2 weeks so this week's contrary movement makes sense with oil and heating oil back down again and farm diesel higher on the week. We maintain diesel has bottomed and will not reach that same low level from February again in 2016.

DieselThe net result of this week's fertilizer and farm fuels price action supported a pretty good bump in our Nutrient Composite Index on the week.

Corn Futures -- December 2016 corn futures closed Friday, April 1 at $3.69 putting expected new-crop revenue (eNCR) at $578.26 per acre -- lower $30.26/acre on the week. With anhydrous priced at $578.26 this week, the eNCR/NH3 spread widened 50.24 points and now stands at 15.14. This means one ton of anhydrous is priced at a 15.14 premium to one acre of expected new-crop corn revenue.

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Nutrient/Fuel
3/21/16
3/27/16
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$565.50
$573.42
$19.98
$593.40
Anhydrous
DAP
$484.36
$483.54
-$1.72
$481.82
DAP
MAP
$498.22
$494.23
$1.34
$495.57
MAP
Potash
$363.14
$358.89
-$2.29
$356.60
Potash
UAN28
$279.98
$271.64
$5.46
$277.10
UAN28
UAN32
$305.60
$304.85
$4.05
$308.90
UAN32
Urea
$367.25
$371.68
$1.68
$373.36
Urea
Farm Diesel
$1.50
$1.51
7 cents
$1.58
Farm Diesel
LP
$1.02
$1.04
1 cent
$1.05
LP
Composite
588.41
586.01
5.50
591.51
Composite

 

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