P&KToday: Potash Raising Red Flags

Posted on 03/09/2017 10:12 AM


DAP and MAP were mixed on the week as potash firmed.

  • DAP $93.14 below year-ago pricing -- lower 34 cents/st on the week to $441.39/st.
  • MAP $110.40 below year-ago -- higher 45 cents/st this week to $445.30/st.
  • Potash $106.72 below year-ago -- higher $1.36/st this week to $305.55/st.

The national average corn basis firmed 8 3/4 cents from last week to 15 3/4 cents below March futures. The national average cash corn price firmed 18 1/4 cents from last week to $3.42 1/4. Basis is softer than the three-year average, which is 5 cents below futures for this week.

inputsmonitor.comDAP was our only decliner across the fertilizer segment this week falling 34 cents per short ton. Michigan led declines falling $7.66 as Kansas and Nebraska each shucked about three bucks. Four states were unchanged as Illinois firmed $5.96 to lead gains followed by a $3.27 increase in South Dakota.

MAP firmed 45 cents per short ton this week with Illinois firming $6.80 and Nebraska up $3.94. Kansas fell $4.30 to lead declines along with Iowa, which softened $2.08. Four states were unchanged here as well.

Potash continued higher this week led by an $11.03 gain in Illinois and South Dakota which added $3.16. Only two states were unchanged with most slightly higher. North Dakota fell $3.42 as Iowa softened $1.68.

inputsmonitor.comPotash continues to suggest it has struck a turning point. We have watched potash prices tank since summer 2013 to a level well below any fertilizer we survey and to a sharp discount to expected new-crop corn revenue. There is still a great value to be had here so we are not placing a whole lot of urgency on booking for spring just yet, but we have been right on the edge of booking for a few weeks now, and we will be pulling the trigger very soon if prices want to bottom here. PotashCorp recently announced another round of production curtailments, some which will take effect in January 2017 which may have the retail market on edge. It is too soon for that to have trimmed the global oversupply, but as uncertainty grows and prices firm, however slightly, we would do well to pay extra attention lest prices get away from us before we can take advantage of the current low-price opportunity.

Phosphate manufacturers are set to see profit margins widen as feedstock prices for ammonia, phosphate rock and sulphur are softening. We believe DAP and MAP are likely to trade sideways through the offseason, but we do favor the downside, especially if fall phosphate applications outpaced expectations. That will mean two things for our outlook. The first is weaker demand heading into spring which will limit the upside on the basis of demand discovery. The second, is fresh product imported from foreign shores will have been produced using those lower priced feedstocks which will also limit the upside.

For the above reasons, we are willing to let phosphate show us what it's got, but potash is on our radar, front and center with urea and UAN, all of which are indicating price firmness ahead. We will wait to make sure the end of post-harvest applications are complete and fully figured in to our weekly regional average price before moving on this, but be prepared to book portions of urea, UAN and potash for spring in the next few weeks.

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 December 2, 2016.

DAP is priced at 46 cents/lbP2O5; MAP at 41 1/2 cents/lbP2O5; Potash is at 25 cents/lbK2O.

P&K pricing by the pound -- 12/9/2016

DAP $P/lb

MAP $P/lb
Potash $K/lb
$0.46 1/4
$0.41 1/2
$0.25 1/2
$0.56 1/2
$0.53 1/2
$0.34 1/4





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