Inputs Market Update: Fertilizer Turns Lower

Posted on 03/09/2017 10:12 AM

 

Gains tallied $1.79 to Declines' $12.56 in the regional averages.

Fertilizers were generally softer on the week with mild gains led by anhydrous ammonia and urea. Fertilizer prices have firmed moderately since nitrogen posted a low in late February/early March, but the fact that fertilizers are turning lower even before USDA reports planting progress 100% complete supports our analysis which calls for lower summertime prices.

Urea was our upside leader, firming $1.45 regionally, led by a $27.91 price increase in Michigan. Minnesota firmed $5.32 and Indiana is up $3.95 on the week. All other states were unchanged to slightly lower. Chinese producers continue to export urea at or near their break-even production price which will continue to weigh on nitrogen prices through summer.

Anhydrous firmed only slightly -- up 30 cents by the short ton regionally. That was led by increases in Kansas to the tune of $8.84, Indiana up $3.89 and Nebraska which firmed $1.30 on the week. As I said above, anhydrous ammonia's weak price performance is encouraging to fertilizer market bears since planting is not yet complete. Anhydrous demand has not yet been fully exhausted and the timid increases suggest supplies are ample which bodes well for summertime price softness.

Phosphate declined this week but remains priced well above anhydrous on an indexed basis. We do expect price softness to continue on the phosphate segment, but U.S. retail prices will be dependent upon import prices for guidance. North American phosphate production remains weak and until the farm economy recovers, expect North American phosphate producers to remain cautious with production levels.

Potash led to the downside regionally falling$4.05 per short ton on the week. Indiana was our only state posting a higher price -- up $3.01 by the short ton. Kansas led declines falling $18.10 and North Dakota was not far behind, falling $17.10 of its own. Burdensome global stocks will continue to weigh on potash prices despite production cutbacks on the part of North American K producers.

Farm diesel firmed 4 cents per gallon as crude oil has turned bullish, first on forecasts for growing global demand and more recently on production declines in various global producing nations including the U.S. and China. U.S. crude oil stocks rose slightly in the week ended May 13 according to EIA data which will limit the upside for WTI crude oil. But we expect the downside to be limited for farm diesel for the time being.

Corn Futures -- December 2016 corn futures closed Friday, May 13 at $3.98 putting expected new-crop revenue (eNCR) at $627.01 per acre -- higher $23.54/acre on the week. With anhydrous priced at $606.04 this week, the eNCR/NH3 spread widened 23.25 points and now stands at -20.97. This means one acre of expected new-crop revenue is priced at a $20.97 premium to one ton of anhydrous ammonia.

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Nutrient/Fuel
5/2/16
5/9/16
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$605.52
$605.75
30 cents
$606.04
Anhydrous
DAP
$489.28
$489.52
-$3.83
$485.68
DAP
MAP
$501.62
$502.69
-$2.35
$500.34
MAP
Potash
$357.47
$357.69
-$4.05
$353.65
Potash
UAN28
$280.71
$283.02
-$1.30
$281.72
UAN28
UAN32
$312.17
$311.92
-$1.03
$310.89
UAN32
Urea
$376.56
$377.45
$1.45
$378.90
Urea
Farm Diesel
$1.64
$1.69
4 cents
$1.73
Farm Diesel
LP
$1.02
$1.01
Unchanged
$1.01
LP
Composite
600.30
601.47
-2.29
599.18
Composite

 

 


 

 

 

 

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