A slump in nitrogen costs this summer gives growers a chance to lock in products they’ll need for 2018 across the fertilizer complex. But different tools and urgency will be needed to secure the best deals.
Ammonia prices continue to move lower as reductions at the Gulf move up the supply chain. The big question is whether a weak international market will push costs even lower in July after a big break in June. Some dealers in the southwest Plains cut their offers below $400 already, Our average is down to $475, which is around $25 too high according historical projections of fair value. So growers who book needs now should be pressing for good deals.
Urea is normally the first part of the nitrogen market to make price moves, both up and down. After tumbling to 14-year lows, the Gulf cost ticked a few dollars higher last week and the swaps market shows that trend continuing into fall. Even so, upside looks limited. Production in the U.S. is on the rise and seasonal demand around the world likely won’t last. U.S. prices rose on demand from overseas buyers taking advantage of the lowest costs in the world; farmers should use that endorsement to wrap up supplies they’ll need for the coming crop year. Our average retail cost is $305.50, which seems fair given the current tone of the market. Dealers on the Plains are even lower, with recently updated offers there running $265 to $295.
UAN on the spot market edged lower again last week, with the Gulf 32% benchmark losing $2 to $139. But the real market to watch is for swaps. August contracts are at $121.50, and that’s up a little from the previous week. Growers should be working hard now to lock in supplies for late summer-early fall. While the retail average for 28% is at $226.75, fair value for deferreds is around $200, which would be the best price this decade.0.
Phosphates were mixed last week in a market that has a flat tone due to buyers’ perception that production is rising around the world. That dampened the price for U.S. DAP exports, but domestic costs actually firmed a little. Contracts in the swaps market are flat at the Gulf into September around $308.50, a price that translates into around $445 at retail, With our dealer average $20 below that, growers should be looking to lock in supplies if they can get a good price. The market doesn’t appear to have a lot of upside, but it may not have much downside potential for bargains either.
Potash prices continue to show little movement. Costs at the Gulf moved a little higher on immediate demand, but summer contracts were a little lower. That’s keeping retail prices stuck around $325, with most growers on the sidelines. Given the current tone farmers should be trying to book needs around $300, given the Corn Belt terminal cost of $253.
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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.