Tractor with high wheels is spraying fertilizer on young wheat. Leonid Eremeychuk/iStock/GettyImages

Fertilizer Outlook - Buying leftovers could be smart move in fertilizer

N, P and K prices move higher around the world.

Myriad factors in the year ahead could swing fertilizer costs either higher or lower. But with wholesale values on the rise around the world, scouring the market for leftover inventory now could help control risk on 2019 crops.

Ammonia prices available this summer should be cheaper than the nearly $500 price farmers paid ahead of planting this year. But with dealers still waiting for news about restocking costs, it appears the market is starting to firm its expectations. Few dealers are changing offer sheets yet, but could cut prices significantly from current levels. Plants on the southern Plains continue to drop prices in line with Gulf values, but international costs edged higher as production by some exporters dropped. Current costs at the Gulf of $245 a ton translate into an average retail price around $100 less than the average retail cost this week of $493, which was little changed because few dealers are adjusting offers this late in the season. Growers should be talking to dealers about their plans, balancing increased U.S. production with the always precarious supply chain in ammonia that could make product hard to get when farmers need it. As usual, dealers on the Plains should be $20 to $40 cheap than those further east in the Corn Belt. April exports were scant but should be picking up with the end of the U.S. application season.

 

Urea edged lower last week, on both the retail, wholesale and some international price points. But stability appeared mainly the result of markets digesting gains from late May because the market looks ready to keep rising thanks to good demand globally. China remains absent as an exporter, and is even importing some cargoes, throwing the world supply and demand balance out of kilter. The next big news could come out of India, the world’s larger importer, supporting prices on a new tender or pressuring values if buyers there stay on the sidelines. Our current average retail price around $350 a ton may not have much if any downside right now, because dealers bought inventory before the rebound in prices at the Gulf, which is at $232.50.

UAN saw a decrease last week of around $1 for 28% from retailers last week as most farmers have booked all they need. Wholesale prices, meanwhile, were steady at the Gulf for 32% at $169. Swaps at the Gulf show costs falling to $157 for August/September contracts, which translates into an average retail price of $218 for producers looking to book fall needs.

 

Phosphates were again the most active market last week, and not in a good way for farmers. DAP at the Gulf jumped another $9.50 and likely will move higher again after suppliers raised summer refill prices. While the Gulf was at $390 last week, July swaps were at $400, which translates into an average retail cost of $495, suggesting no price break from current levels. Good demand and higher nitrogen costs for component fertilizers are providing support to the phosphate complex, with some terminals already raising prices.

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Potash won’t see any seasonal price slump this summer. Rather, costs are likely to ratchet higher for growers booking supplies. Costs at the Gulf were up $2.50 to $245, with Midwest terminals at $274, up $5. That translates into retail prices around $358, $14 higher than our current average.

For more information about national and international fertilizer markets, go to Fertecon.com.

More from Farm Futures:
Corn Outlook
Soybean Outlook
Wheat Outlook

Download a complete version of the outlook with extensive charts and analysis using the Download button at the end of this report.

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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