P&K Today | NH3 and Potash Examined

Posted on 04/27/2018 11:50 AM

 

  • DAP $37.45 above year-ago pricing -- lower $1.71/st on the week to $484.93/st.
  • MAP $49.19 above year-ago -- higher $1.63/st this week to $517.50/st.
  • Potash $12.03 above year-ago -- lower 1.04/st this week to $345.90/st.

MAP was the only gainer in the P&K segment this week led by Michigan, which added $7.25 as Kansas firmed $6.25. Three states were unchanged as Ohio softened $1.45 and Indiana fell 98 cents.

DAP declined on softness in Nebraska to the tune of $17.30; Illinois fell $10 even and Wisconsin was off $6.40. Three states were unchanged here as well as Minnesota gained $14.65 to lead gains and Kansas added $1.72.

Potash was lower with Illinois off $8.42, Ohio fell $2.81 and Kansas softened $2.67. Two states were unchanged as Nebraska gained $3.30 and Michigan firmed $2.78 per short ton.

We continue to watch the relationship between anhydrous ammonia and potash. While suggesting that potash and nh3the relationship is predictive may be a stretch, at the very least, the two do seem to follow similar price paths. There have been periods of divergence. The widest divergence was just recently when anhydrous dipped to a 19.5% discount to indexed potash. Prior to that, most divergence was confined to a 6% to 10% range. There is risk that NH3 could correct sharply higher. During the spring period in 2014, NH3 went from a 6.3% discount to potash to a 10.8% premium. In other words, the last time we saw this specific technical setup, anhydrous posted a larger premium than the discount that immediately preceded the move.

But the tables have turned in the current setup, and if the discount to premium ratio is to be trusted, NH3 scored a 6.6% premium in spring 2017 before falling to the 19.5% discount. That may conclude the gyrations and signal a period of steady, lockstep pricing between NH3 and potash. We believe that phosphate potash nh3 spread matrix chartis the more likely scenario as we believe the $530 level in NH3 from spring 2017 will mark tough price resistance.

If we add phosphates to the potash/NH3 chart, you can see clearly how phosphate has diverged sharply and has held a hefty premium to potash since July 2016. As we mentioned last week, manufacturing fundamentals are adding support to DAP and MAP prices, and while phosphates have tended to trend along with NH3 in years past, the premium phosphate holds to potash and NH3 continues to grow.

To the good, we see little risk phosphates will pull anhydrous ammonia higher. Again, we base that on manufacturing fundamentals being the reason for phosphate's overpriced condition. Once manufacturing fundamentals improve for DAP and MAP, phosphate prices should correct lower to better reflect pricing across the rest of the fertilizer segment.

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 April 20, 2018.

DAP is priced at 50 1/2 cents/lbP2O5; MAP at 48 3/4 cents/lbP2O5; Potash is at 28 1/2 cents/lbK2O.

P&K pricing by the pound -- 4/27/2018

DAP $P/lb

MAP $P/lb
Potash $K/lb
 
Average
$0.50 1/2
$0.48 3/4
$0.28 1/2
Average
Year-ago
$0.46 3/4
$0.43 3/4
$0.28 1/4
Year-ago

p and k indices


 

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