Urea prices pulled back on global markets again last week, but the decline hasn’t spread to most other nutrients using nitrogen. Retail prices are also likely to stay firm if not higher on all but the most current markets as dealers reset offer sheets for winter.
Ammonia were firm last week on international markets thanks to rising costs out of the Black Sea, where supplies are tight after product was diverted to make urea to capture profits in that segment of the complex. U.S. retail prices also moved higher, gaining around $7 from earlier in November. Still, our retail average price of $394 remains considerably below replacement cost based on current export prices out of the Gulf, which settled for November at $277 -- $105 above August lows. Average dealer prices have captured only $25 of that move, leaving plenty of upside if growers want to apply anhydrous yet this fall or in the spring. Dealers on the southwest Plains, where prices tend to change frequently, have already boosted costs $60 to $80 in some locations, a sign of what could be in store further east in the Corn Belt. USDA’s bi-weekly surveys in Illinois and Iowa show average prices up only $7 to $16.
Urea took another hit at the Gulf last week, dropping to $231.25, $19.75 off Halloween highs. After the latest of three tenders by India brought a flood of offers into the market, the buying agency pulled the deal off the table, sending the market into a tailspin internationally. Still, wholesale prices are $70 or more off summer lows, so offer sheets that haven’t updated in a while will still jump when they reset. While dealers changing prices frequently lower offers last week $20, others were raising prices that much or more, leaving average retail costs only up a couple of bucks a ton. But our average retail cost looks around $50 too cheap based on wholesale costs, and swaps into spring don’t show much if any pullback.
UAN settled unchanged last week following a $40 move on wholesale markets this fall in response to the rally in urea. The index price at the Gulf for 32% stayed at $157.50, though swaps into winder add a $10 bill onto that cost. Average retail prices for 28% remain little changed in an inactive market at $211, which looks at least $25 undervalued based on current wholesale charges.
Phosphates are moving higher thanks to rising costs for the ammonia component of compound products. While abundant world supplies keep overall costs restrained, the trend has been higher, with higher sulfur prices also factoring in. The DAP price at the Gulf edged up to $344 last week, its highest level in nearly two years, a span that saw it trading in a $50 band. Export prices from Tampa gained $16.75 as well. Retail costs are slowly edging higher as dealers reset prices for winter, with updated sheets last week adding around $10, taking costs above $440, compared to our average of $430. Those retail prices still look cheap but historical standards, but demand may be lackluster unless crop prices improve.
Potash is slowly retreating as dealers post new prices, taking $4 off the average retail price last week. Still, at $319 the price looks a little pricey compared to a flat wholesale market.
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Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Adviser. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.