Farmers in the U.S. may take a look at unprofitable crop prices and wonder why fertilizer costs are once again on the rise. The answer can be found overseas. Record wheat prices in Russia, stronger corn values across Europe and strong Chinese demand for Brazilian soybeans are all driving values for N, Pand N.
Ammonia costs look ready to move higher this fall, giving farmers planning fall applications a tough choice. Product may still be available after some dealers restocked this summer. Those who wait likely will pay more in a month or two, an expectation that took terminal costs up $30 to $40 this week from the Plains to the eastern Corn Belt. While retail markets were mostly quiet, new offer sheets are running around our average replacement cost of $486. That cost looks fairly valued now given the benchmark index of the Gulf at $281. But $500 or more could be the rule, not the exception, this fall for those buying on the spot market.
Urea charged higher again this week on wholesale markets and the hikes may not be over yet. The cost out of the Gulf was up $17 to $277.50 and swaps for September are at $285. These trades suggest urea could run up to $400 to $450 this fall from dealers. While our average retail listing is at $355, new offer sheets the past couple of week have been running around $395. Prospections for improving moisture and higher prices could spur winter wheat plantings this fall, adding further strain to a supply chain that’s already tight. While swaps into fall don’t show any more price increases after September, uncertainty about availability of supplies out of Iran and Russia are a question mark going forward.
UAN saw itsbrief summer pullback ended quickly a month ago. The cost of 32% at the Gulf is up more than $30 since then and looks set to keep rising, with November swaps at $185. While that translates into a 28% retail value around $260, some dealers on the Plains are already $10 higher than that. The USDA survey of prices in Illinois and Iowa were a little more restrained this week at $235 and $256 respectively.
Phosphates followed the trend in the nitrogen market, though increases were modest due to little demand from the retail sector. The rising value of the nitrogen component of products was seen in DAP at the Gulf, which gained around $2.50 to $408.50. That translates into a replacement cost at the retail level of around $510, though some dealers are already at $520. The weak value of the real in Brazil makes imported fertilizer more expensive for growers who can begin planting soybeans in mid-September. But those pricing beans in dollars are at an advantage, keeping demand strong. Swaps out of the Gulf don’t show any further price increases this fall, which could mean the market has topped out for now.
Potash was steady at the Gulf last week but the Midwest terminal price advanced $7 to $295, suggesting dealers expect good demand for fall application. Current wholesale costs indicate retail prices could just about $380 this fall, though the top end of new offer sheets recently has been running around $370.
For more information about national and international fertilizer markets, go to Fertecon.com.
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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.