DAP and potash softened as MAP firmed slightly on the week.
Phosphates have been under pressure since November and potash has trended lower since June. Potash has been under heavy pressure from global oversupply thanks to Russian and Belorussian producers trying to outmatch each other's marketshare and to prop up national revenues via potash exports. The result has been extremely low potash pricing.
Phosphate prices have fallen but are still recovering from very high-priced feedstocks and turmoil in exporting nations in the Middle East and North Africa which supported higher retail prices. Demand has become a bit of a problem on the global scene as India front-loaded imports ahead of preplant applications and has been absent from the market. Brazilian demand has been depressed in response to currency weakness and a mild credit crisis. MAP demand in Brazil has picked up slightly since the first of the year, but India has decreased subsidies to farmers for phosphate fertilizers and those two features basically have offset each other.
China has eclipsed North America as the number one global producer, but China has adopted a flat tax system for phosphate exports rather than the former trade policy which included a variable rate according to seasonal global demand features. Raw sulphur is currently sharply lower year-on-year thanks to negotiations between suppliers and Chinese producers which has changed the landscape of inputs for phosphate manufacture. Previously, finished phosphate producers were booking their inputs on a hand-to-mouth basis on price uncertainty. Industry watchers have reported buyers are booking sulphur and other inputs on a monthly basis on lower, more stable prices.
Less volatile inputs will help limit upside risk in retail phosphate in the long-term. In the here and now phosphate is still looking for fresh U.S. demand news, even as preplant applications roll. We have booked our nitrogen for spring/summer 2016 but have advised to book potash on a hand-to-mouth basis. The forecast through 2016 is for phosphate to come under pressure, but spring demand will come as welcome news as American farmers get into the field, and may add support to prices.
At this point, if we are talking about limiting inputs expenses, growers may be forced to choose between phosphate or potash, or some combination of both. Since potash prices have fallen so far, the downside should be exhausted before declines in phosphate come to an end. In the short-term, we do expect firmer phosphate prices in the U.S. on the basis of firming farmer demand, but at this point, it looks like phosphate prices may be much more favorable in the fall. If I had to choose between cutting phosphate or cutting potash, on the basis of price, potash presents a much better value than does phosphate.
Since the market is indicating phosphate will soften and better reflect the rest of the fertilizer segment through the summer, I favor potash applications over phosphate applications this spring. You know your farm's soil nutrition needs better than anyone and while I do not recommend skipping phosphate altogether, my approach would be to apply a healthy dose of potash ahead of planting and base phosphate rates on what is leftover in your P&K budget dollarwise. Since corn prices are not currently giving bulls much to hold onto and phosphate remains at the top end of our price survey when compared to new-crop returns, yield will have to be maximized through sound agronomy. Having said that, expect to catch up on phosphate applications in the coming fall.
For now, we are looking for a clear indication of a low in phosphate and booking potash hand-to-mouth for spring applications.
- DAP $98.13 below year-ago pricing -- lower $3.89/st on the week to $481.43/st.
- MAP $93.96 below year-ago -- higher $3.51/st this week to $499.01/st.
- Potash $121.08 below year-ago -- lower 89 cents/st this week to $365.66/st.
- The average cash corn price figured in to P&K this week is $3.44 1/2.
- The national average corn basis softened 1 cent from last week to 2 1/4 cents below May futures. The national average cash corn price firmed 4 1/4 cents from last week to $3.56 3/4. Basis is softer than the three-year average, which is 9 3/4 cents above futures for this week.
By the Pound --
The following is an updated table of P&K pricing by the pound as reported to your Inputs Monitor for the week ended March 4, 2016.
DAP is priced at 50 cents/lbP2O5; MAP at 47 cents/lbP2O5; Potash is at 30 1/2 cents/lbK2O.
P&K pricing by the pound -- 3/10/2016