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Fertilizer Outlook - Fertilizer prices shoot higher in 2018

New offer sheets pass on higher international costs to farmers.

Dealers are ringing in the New Year with updated price sheets that show higher costs for most nutrients, reflecting the fall rally on the global fertilizer market. While nitrogen continues to pace the round of increases, potash and phosphates also have a firmer tone as 2018 begins.

Ammonia shot higher as some dealers posted new prices for the first time since the market took off last fall. With the average retail cost of anhydrous now around $460, local charges have made up some, but not all of the ground previously paved by increases in wholesale values. Costs on the Plains are running $450 to $495 and values further east are mostly higher. Though some new price sheets in Illinois are as low as $435, the average reported by USDA before Christmas was $490, $72 higher than earlier in the month. Fundamentals still point to costs above $500 but further advances could depend on whether corn growers balk at higher prices due to poor profit prospects and switch to soybeans.

 

Urea took another step higher into 2018, thanks to a tender by India before Christmas that raised offers from producers. Closure of plants in China to combat pollution – a chronic problem in winter there – has removed an important source of supply from world markets, despite the increase in capacity coming on in the U.S. That sent the index at the Gulf back to its highs for the year around $252. The higher wholesale cost translates into potential for retail prices to reach close to $400, which is also the target suggested by current fundamentals. Average retail values are still a little below $330, but reflect some dealers that have not boosted prices recently. Retailers updating offer sheets at year-end were more in the $335 to $350 range. Swaps show mostly steady prices through March before costs could ease seasonally.

UAN continues to follow the rest of the nitrogen complex higher, though most dealers aren’t posting new prices yet. The index for 32% at the Gulf is up to $167.50, with costs into spring another $10 higher. That translates into an average retail cost for 28% around $245, while dealers posting new prices at year end were mostly at $220 to $235. However, some were still below $200, suggesting leftover supplies still available at a discount.

 

Phosphates also edged higher on retail markets as more dealers put out new offers, taking the cost of DAP on average to nearly $447. Prices could still have some upside as demand surfaces, with wholesale costs suggesting prices could be $480 over the winter before easing into spring. Higher nitrogen costs are impacting the compound fertilizer market, though overall phosphate supplies are strong.

 

 

Potash continues to ratchet higher on the retail level, as wholesale prices remain supported by production cutbacks by some Canadian producers. Dealers resetting prices raised the average cost to $327.60, in line with current wholesale values.

More from Farm Futures:
Corn Outlook
Soybean Outlook
Wheat Outlook

Click on the link below to download additional charts.

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.

 

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