India stepped in to buy more urea last week, but the big tender didn’t have legs here in the U.S. Still, while wholesale costs for fertilizer remain soft, retail prices rose nonetheless in some areas as dealers avoid restocking due to the uncertain demand and price outlook.
Ammonia prices moved higher on average last week, despite overall weakness in the nitrogen market, as a few dealers reset offer sheets. Some charges eased, however, with much of the retail market on either side of $500. Our average is at $494, which seems $100 overvalued by historical trends given the April contract price at the Gulf of just $249.50. So far, there are no indications that charge should move higher, which should give growers a shot a locking in lower prices this summer for fall applications.
Urea tends to lead the nitrogen complex higher and lower, so the market was on high alert to find out if India’s tender would shock prices out of the doldrums. So far, it hasn’t. Overseas markets popped a little then gave back some of those modest gains as sellers scrambled to get rid of inventory they hadn’t been able to move. Prices at the Gulf also tried to firm, but wound up $8.50 lower by the end of the week, settling around $219. That level translates to a fair retail replacement cost of $345, $10 below our average, which was down $6 to $354.50 as retail slowly incorporates the larger downturn on the wholesale market. New offer sheets last week were both higher and lower, ranging from $325 to $360. Trading in swaps into August at the Gulf are another $15 to $20 lower, which could give more growers a shot at the bottom end of that range.
UAN costs look like they’ll be much cheaper by the middle of summer. But that won’t do growers needing to book supplies now. Retail expense for 28% kept rising, reflecting earlier increases in a wholesale market that appears to have topped. Our average retail price gained $2.50 last week to $237, and could go higher because it’s about $10 below current replacement cost. The value of 32% at the Gulf last week edged lower to $178.50, the second straight week of small losses following a $65 jump from fall lows.
Phosphates were a pretty slow market for much of the past couple of years, but that changed over the winter with the upturn in the cost for the nitrogen component of compounds. Retail DAP price changes last week were both higher and lower on new offer sheets, which overall gained $1 on average to $484. Upside price pressure appears to exist, because the new prices were in the $480 to $510 range, even though replacement cost is around $475, though lower nitrogen costs pressured the Gulf price to $282.50, off 50 cents. Swaps into mid-summer show retail costs dropping another $15 to $20 to $450 or less.
Potash saw its first suggestion of spring that prices may be peaking after a steady rise in 2018. Our retail average was down just 75 cents to just under $342, though offer sheets went both higher and lower. The increase on the retail side still hasn’t matched the rally at the wholesale level that appears to be stabilizing. Our fair value of $350 comes with the Gulf cost steady at $239 and the Midwest terminal price at $272.
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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.