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Weekly Fertilizer Review - Lock in fertilizer supplies now

Year-end rally could raise nutrient prices soon.

January is usually the best time to buy fertilizer for spring crops and 2017 should be no exception. Despite a late year rally on wholesale markets, many growers may still be able to find products at fairly reasonable costs if they move swiftly.

Ammonia prices rose another $22.75 for contracts settled this month at the Gulf, on top of a $14 increase in December. The rally in urea along with a dispute over Russian natural gas supplies that blocked the flow out of Ukraine forced prices higher, despite rising production from U.S. plants and reductions in corn and wheat acreage for 2017. Domestic sources should keep ammonia costs from exploding, but the average retail price of $430 is fair considering wholesale costs. While USDA’s survey last week put average costs in Illinois at $481, with Iowa at $468, it’s not impossible to find offers around $420 in that part of the Corn Belt. Retailers on the Plains as usual are cheaper, with some around $380, but prices jumped out west too on the international rally.

Urea prices went up around $5 last week on the retail level, but their $27 increase over the past two months is small compared to the $70 rally on the international market since summer. Current average retail values of $327 are $50 below replacement costs. New offer sheets on the Plains are running around $335 to $345, reflecting upward pressure from the international rally. Swaps into spring point to potential for another $10 boost in costs, depending on whether China’s exports begin to recover. Suppliers there held back on production and shipments due to rising prices of coal, their primary feedstock.

UAN also looks cheap compared to potential price increases later this year, with current retail markets offering some of the best relative values in the entire nutrient complex. The index for 32% at the Gulf is following the rest of the nitrogen market higher, rising $7 last week to $161, with swaps for April settling Friday at $183.50. That translates to potential retail prices around $265 for 28%. Our average this week is at $210, with updated offer sheets around $200 to $220. USDA put the average cost in Illinois at $223, with 32% in Iowa at $255 according to its survey.

 

Phosphates were fairly stable over the summer and fall, but started to edge higher after bottoming in December. The index for DAP at the Gulf was up $4 last week to $306.50, and swaps for spring are another $10 higher. Current retail prices average around $415, $20 below replacement cost off the wholesale market now. Updated offer sheets are $400 to $410, so some decent values are available now. Chinese supplies appear to be limited despite removal of the country’s tax on exports, which could keep prices from easing.

 

Potash prices were firmer last week on the retail market, reflecting the fall rally internationally. Potash also looks cheap compared to replacement costs. Updated offer sheets are running around $300, $50 below the price of new supplies based on wholesale Corn Belt terminal expenses of $248. Some production closed in Canada is starting to reopen, a sign the companies’ effort to raise prices by cutting inventories has worked.

More from Farm Futures:
Weekly Corn Review
Weekly Soybean Review
Weekly Wheat Review

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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