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Fertilizer Outlook - Corn fertilizer costs up more than 20%

Quiet market ahead of harvest masks more pain for budgets.

Fertilizer costs are trading mixed so far in September, ahead of what looks like another huge harvest in the U.S. But while growers here confront low crop prices, rising markets around the world are boosting demand for fertilizer. The ripple effect is landing with a thud on budgets for 2019, raising the cost of corn nutrients by more than 20% over year-ago levels.

Ammonia costs edged higher again last week on the wholesale market as growers planning fall applications get serious about finding supplies. But while those charges suggest an average retail price topping $500, USDA’s surveys this week showed suppliers dropping offers as more began posting fall offer sheets. The average in Illinois was put at $496 though Iowa dropped to $461. Dealers on the central Plains are mostly around $460 to $500, with those closer to plants in Kansas and Oklahoma down near $400 before the latest round of price hikes. Ammonia continues to trend higher, following gains in urea. The September contract price for Gulf ammonia is at $299, more than $100 higher than last September.

 

 

Urea moved higher again last week on both the wholesale and retail market, thanks to world prices up dramatically as poor harvests drove crop prices higher from South America to Europe and Australia. With India back in the market, the market likely faces another potential turning point with many emerging market currencies weak against the dollar used to price international shipments. Our average retail price moved topped $380 last week, but still looks $30 under replacement costs for dealers wondering if farmers already paying $100 more per ton than last year are ready to buy. The swaps market appears to be questioning that logic too; contracts past September are a little lower than the nearby.

UAN looks ready to get more expensive for growers trying to book supplies into winter, though demand is thin right now from Midwest farmers. But retail prices of $235 to $270 for 28% look undervalued compared to current wholesale prices for 32%. Indeed, the cost of 32% at the Gulf jumped $11 this week to $185, with swaps for winter above $200.

 

Phosphates continue to ratchet higher, supported by the higher price of their nitrogen component. Our retail average for DAP is up to $508, in a range from $480 to $545. The swaps market shows higher costs again in October at the Gulf, where the nearby is already close to $420. Retail prices are up $75 above year-ago levels, putting pressure on farmers who need product to maintain fertility in the face of another year of above average yields in 2018.

 

Potash followed the rest of the complex with modest gains, as a rising tide lifts all boats. Our average retail price gained $2 to $358, with offer sheets running from $340 to near $375, which is close to fair replacement value based on current wholesale costs. The tab at the Gulf actually eased slightly, with Midwest terminals at $295.

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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