DAP and MAP were lower on the week as potash firmed slightly.
- DAP $109.02 below year-ago pricing -- lower $1.62/st on the week to $438.97/st.
- MAP $118.64 below year-ago -- lower 55 cents/st this week to $445.95/st.
- Potash $116.95 below year-ago -- higher $1.89/st this week to $302.97/st.
The national average corn basis firmed 10 1/2 cents from last week to 3 cents below December futures. The national average cash corn price firmed 23 cents from last week to $3.48. Basis is softer than the three-year average, which is 4 3/4 cents above futures for this week.
DAP led declines in the P&K segment falling $1.67 per short ton. Only one state posted a higher DAP price this week, Indiana firmed just 92 cents by the short ton as Minnesota fell $7.10 to lead declines along with Michigan, down $6.82 and Wisconsin softening $3.84. Four of the twelve states we survey were unchanged.
MAP was lower as led by Michigan, down $9.16 and Nebraska down $3.42. Four of twelve states were unchanged as Illinois MAP firmed $5.02 to lead gains along with a $2.46 price hike in Minnesota.
Potash found price support from Indiana which firmed $8.69 on the week as Minnesota added $2.46. Other gains were very mild. Only 2 states were unchanged this week as declines were led by Nebraska, down $5.65 and Michigan, down $1.05.
PotashCorp announced it will cut production at its Cory mine from 1.4 million tonnes to 800,000. In a press release, the company noted, "The operational changes at Cory include a move to producing only white potash with an expected operational capability of approximately 0.8 million tonnes. The facility previously had an operational capability of approximately 1.4 million tonnes and produced both red and white potash. The changes will result in a reduction of approximately 100 permanent employees and 40 temporary positions. About 350 employees will continue to work at the facility."
“This is a difficult day for our employees and their families, and we are committed to helping those affected through this transition,” said Mark Fracchia, President PCS Potash. “We are making this decision to optimize production to our lowest cost operations, including Rocanville and other Saskatchewan sites, where new capacity was added and employment levels have risen by approximately 265 since 2014.”
The release also reported planned production cuts at other PotashCorp facilities in 2017 which will impact an unknown number of workers. (Click here to view the press release.)
Potash is still in very good supply around the world and in the hands of retailers in the United States which will limit the upside through the offseason. Offshore producers are wary of the current oversupply but with the exception of Israel Chemicals transitioning some production capacity away from potash and onto polysulfate, the battle for marketshare wages on in Russia, Belarus and other foreign facilities.
It reminds me a little of the situation in urea where Chinese manufacturers are trimming production to combat higher feedstock coal prices and the world oversupply just as fresh U.S. urea production sets up to fill the supply gap. With potash, lost production will mean lost marketshare and as foreign producers pursue export contracts aggressively, North American producers' footprint in the industry is poised to shrink. The result could be price strength longer-term for U.S. retail potash prices, but, as with urea, we do not expect production increases or decreases to have much impact on prices this winter.
We expect potash to continue to present a value through the winter months and for phosphate to soften to levels that better reflect the rest of the fertilizer segment before spring demand arrives.
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 November 18, 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 -- 11/17/2016