P&K Today | No Foot, No Horse

Posted on 08/16/2018 3:50 PM

 

  • DAP $53.33 above year-ago pricing -- higher $1.39/st on the week to $492.63/st.
  • MAP $63.68 above year-ago -- lower 34 cents/st this week to $523.81/st.
  • Potash $15.67 above year-ago -- lower $2.60/st this week to $348.24/st.

Potash prices led declines in the P&K segment with Michigan off $29.70, Iowa softened 83 cents and Northmap Dakota fell 70 cents per short ton. Eight states were unchanged on the week as Nebraska firmed 4 cents per short ton, our only gainer in potash this week.

MAP was slightly lower led by Iowa which softened $6.16 as Michigan fell 23 cents. Seven states were unchanged as Nebraska gained $1.13 and South Dakota added 81 cents.

DAP posted gains on the week led by South Dakota which added $8.92 and Michigan firmed $6.37. Ten states were unchanged on the week and no states posted a lower DAP price.

Potash producers continue to pass on hard economic times to their workers as Nutrien announced another round of layoffs earlier this month. In an August 1 article on CBC.com (click here to read the full article), Dean Sylvain Charlebois laments Nutrien's prevent defense tactics.potash

"I'm overwhelmed with a sense of disappointment," said Sylvain Charlebois, dean of the Rowe School of Business at Dalhousie University. "It seems to be a ritual this time of year, every year, we have these discussions around layoffs."

Charlebois said a stream of layoffs over the last few years shows a lack of depth in the potash market.

"If demand for potash goes down for one reason or another, in this case it has to do with farmers making less money over the next few months, the only solution we have is to lay off people," he said. "That's not sustainable. The company should be looking at other applications for the mineral itself."

We have referred to the North American potash industry's strategy to combat softening commodity prices as "prevent defense" many times in the past and it appears that the strategy has survived the merger that formed Nutrien. Meanwhile, the same publication reported in June (read the CBC article by clicking here) that Nutrien announced plans to build the tallest building in Saskatchewan to house its corporate offices. The article reports, "...the building will be environmentally sustainable and energy-efficient, with a rooftop winter garden and patio, fitness center, and on-site facilities for its employees."nutrien building

The CBC article regarding the building project included an artist's rendering provided by Nutrien (see right) with a caption that reads, "The building will offer services like a dietitian and personal trainer on site for Nutrien staff and their families." You have got to be kidding me. In this editor's opinion, this is akin to repainting a ship while it sinks. We have reported on PotashCorp's (now Nutrien) strategy of laying off workers and curtailing production for nearly the entire life of the Inputs Monitor. There has been no talk of opening up new sources of demand for potash, no talk of belt tightening to save the jobs of those in the trenches and consistently upbeat messages to shareholders.

We have never trusted those upbeat messages, and to build a luxury office building with so many unnecessary amenities for the corporate officers while working men and women are laid off again and again reeks of greed and preferential treatment for Nutrien's executives at the expense of blue collar jobs. It would seem Nutrien's higher-ups have forgotten the trusted adage, "no foot, no horse."

If I can temper my outrage enough to offer a P&K price forecast, I am torn between Nutrien's layoffs and the building of a crystal cathedral for the executive offices. One would say potash prices will remain under pressure as evidenced by Nutrien's shrinking workforce in the mines. The other would point to Nutrien's lavish architectural designs as a hint that the fertilizer business is set to boom.

Fundamentally, MosiacCo reported higher wholesale DAP and MAP prices at NOLA and in Central Florida for the week ended August 10, and steady wholesale potash prices. As we continue to watch sulphur prices, there has been no change, and phosphate feedstock sulphur continues to prop phosphate prices up.

Look for potash prices to remain steady although we maintain a downside bias between now and harvest. Phosphate has no fundamental reason to fall, and with North American phosphate producers joining the potash industry's prevent defense strategy, retail DAP and MAP prices are not likely to soften meaningfully.

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 August 10, 2018.

DAP is priced at 51 1/4 cents/lbP2O5; MAP at 49 1/4 cents/lbP2O5; Potash is at 28 3/4 cents/lbK2O.

P&K pricing by the pound -- 8/16/2018

DAP $P/lb

MAP $P/lb
Potash $K/lb
 
Average
$0.51 1/4
$0.49 1/4
$0.28 3/4
Average
Year-ago
$0.45 3/4
$0.43
$0.27 1/4
Year-ago

 


 

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