With final planting dates for corn already here in some states – and deadlines for full crop insurance coverage passing in others over the next two weeks – the fertilizer industry is coping with problems just as big as those farmers face. While dealers mull what to do with leftover ammonia inventory, they may face the same task soon with urea as attention focuses on UAN for sidedressing. Growers who can look beyond their immediate situation to focus on 2020 should remain in touch for deals.
Ammonia continues to take the biggest hit in the N-P-K complex, at least globally. Retail prices remain firm, however, with dealers still holding out hope for some sidedressing demand after pre-plant from fall to spring was a bust. A little softness was seen at Corn Belt terminal markets, where the bottom end of the market fell. But wholesale trade continues to suggest ammonia could be cheap this summer if dealers are ever willing – and able – to restock. June contracts at the Gulf lost another $15, slipping just below $200 a short ton for the first time since before harvest in 2017. Average retail prices back then fell to $370, but our current model is “only” down to $413. Whether that target is hit could depend on the ability urea to recover from its own steep downtrend.
Urea values were mixed last week amid signs the market could be turning a corner globally. International costs edged higher though values at the Gulf slipped again, losing $5 to $256. Retail prices headed in the other direction gaining nearly $4 on average to top $400. Some retail dealers are well above that because nothing will move on the Mississippi or Illinois rivers until mid-June or later. Dealers raising prices last week were well above that though few offer sheets are changing right now due to the unusual conditions. Even if some growers vote for urea to side dress, fewer acres overall could leave excess supplies in some areas. Swaps show the Gulf easing $10 to $15 into summer before rebounding to current levels this fall. China and India could determine how the summer market plays out.
UAN or bust may be the cry from some growers needing nitrogen. Retail prices moved $3 higher last week, taking 28% to $265, with bumps of $25 seen in some markets. Fair value is in the eye of the beholder, but that average still looks $20 too high based on Gulf values for 32%, which rose $2.50 to $175. Still, with barges unable to move upriver, the Gulf price is just theoretical for figuring fair value right now. Swaps at the Gulf show 32% breaking $20 or more into late summer, putting a retail cost around $225 for fall applications.
Phosphates were firm last week in a market that’s still relatively quiet, with most of the discussion focused on what prices manufacturers will charge dealers this summer. Nearby prices for DAP at the Gulf firmed $4 a ton last week to $315. With swaps into summer another $10 higher, it appears prices have bottomed at the wholesale level, so growers can expect to pay $400 or more to book supplies for fall. That’s considerably less than paid this year – about $100 less on average.
Potash could be a little cheaper this summer, with left over supplies weighing on prices. But companies know how to cut production to maintain their market, so don’t expect big reductions. While some growers paid $400 this year, prices could be down around $385 on average.