Inputs Market Update: Still Waiting for Pre-Harvest Bounce

Posted on 03/09/2017 10:12 AM

 

NH3"Gains tallied 86 cents to Declines' $9.96 in the regional averages.

Fertilizers and fuels continued lower in this week's price survey. UAN28% led the fertilizer complex lower, falling $2.86 by the short ton. Urea was just behind 28% with a $2.13 price cut. Only DAP posted a higher price in the fertilizer space, firming 86 cents on the week. Even after last week's downside action, and bearing in mind that this week we are generally lower again, we cannot help but think fertilizer is about to post and confirm its pre-harvest low.

We suggested last week that we may have already seen the worst of it in the form of a pause in the downtrend two weeks ago. That may be the case, and we will book for fall applications once we have a better, more solid indication the market has bottomed. Until then, we will wait as long as the market wants to continue lower.

dieselSame deal on diesel. Down a penny this week with most states unchanged. Crude oil and heating oil started the week with a mildly softer tone. We expect crude oil to stay between $40 and $50 per barrel until some fresh news either supports or pressures prices out of that price range. We will wait here too, although between the two, I am expecting diesel to bottom before fertilizer does.

So as fertilizer and diesel fuel slow their respective downtrends, we will wait. I may turn out we are picking pennies here and if your state is priced below our regional average price, I do not believe the market has much more room to fall since demand for both fertilizer and diesel will also pick up in a hurry. To book nutrients and fuel at the right time is tricky. I could be argued a better approach would be to book on the tail end of a downtrend and then once again once a fresh uptrend is established. If that is the way you want to go, I would call my local preferred retailer and have a quick conversation about your local [hosphatesupplies and near-term price forecast. Either way, the time to book will soon be upon us, either because the market will forge a short-term harvest recovery, or farmers will simply run out of time and wind up booking hand-to-mouth as needed.

Corn Futures -- December 2017 corn futures closed Friday, August 19 at $3.82 putting expected new-crop revenue (eNCR) at $600.12 per acre -- up 15.13 on the week. With our Nutrient Composite Index (NCI) at 547.82 this week, the eNCR/NCI spread widened 19.23 points and now stands at -52.30. This means one acre of expected new-crop revenue is priced at a 52.30 premium to our Nutrient Composite Index.

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Nutrient/Fuel
8/8/16
8/15/16
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$550.01
$549.06
-$1.17
$547.89
Anhydrous
DAP
$465.91
$461.03
86 cents
$461.89
DAP
MAP
$481.16
$472.93
-$2.15
$470.78
MAP
Potash
$334.75
$328.76
-$1.31
$327.45
Potash
UAN28
$273.24
$261.93
-$2.86
$259.07
UAN28
UAN32
$285.27
$277.88
-33 cents
$277.55
UAN32
Urea
$344.14
$335.52
-$2.13
$333.39
Urea
Farm Diesel
$1.80
$1.78
-1 cent
$1.77
Farm Diesel
LP
$0.98
$0.96
Unchanged
$0.96
LP
Composite
563.22
551.92
-2.11
547.82
Composite

 

Index


 

 

 

 

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