Hopes for better U.S. weather and a little global demand firm costs.
Hope springs eternal, both for farmers itching to get into the field and for fertilizer manufacturers hoping to boost prices and sales. So far the fertilizer market is getting the best of it, with prices mostly firm to a little higher this week.
Ammonia prices showed a few signs of easing this week, at least on markets sensitive to global prices. Anhydrous tends to follow urea, and with prices for 46% down this month overall, ammonia contracts for May at the Gulf should in theory ratchet a little lower too. Eventually, that should work to the benefit of growers buying for fall application, because the current Gulf price of $249.50 translates to a retail cost below $400. But retail prices show little sign of that dynamic yet. Our average farmgate price of $494 was unchanged, despite potential for more growers to shift to other products due to the slow start to planting.
Urea is firm this week on both wholesale and retail markets as the global trade debates whether a bottom is in. Our average retail price edged $1 higher to $355.50, but updated offer sheets run anywhere from $325 to $370 on the southern Plains. Our current replacement cost estimate is $347, based on Gulf prices that dropped this spring but were $1 higher last week at $220. The international market remains mixed, however, with Black Sea costs easing despite some new demand coming on to the market. The swaps market shows Gulf prices falling $15 into August, which would lower retail to $326 on average. U.S. nitrogen production continues to increase, but so far is mostly just replacing lost output from China.
UAN could be the go-to nitrogen source this year if growers feel rushed, a prospect that’s keeping retail prices firm. Our average retail price rose $1 this week to $238 for 28%, with more prices moving closer to replacement value of $245. Retail costs didn’t keep pace with the increase on wholesale markets since fall, because little demand surfaces early for UAN. So retail prices could stay firm, even though wholesale barometers are falling. The cost at the Gulf was down $2.50 to $176 for 32%. Swaps into August show that Gulf cost falling another $33, which could take 28% retail down to around $200, but too late for this year’s growing season.
Phosphates also appeared to react to farmer demand last week, helping prices continue their steady move higher. The retail average price of DAP jumped $4 to top $488, with more offers at $500 or better. Even though the export price for product leaving Tampa eased last week, the Gulf cost was up $2.50 to $385. That level translates to a price of $477 for replacing inventory at retail, suggesting demand may be pushing prices up a little. As with the other markets, swaps show costs easing through the summer, with potential for $450 or so by September.
Potash remains a stable market, with little sign prices are ready to move much higher or lower. Our retail average was steady at $341, a little below replacement cost of $350 based on wholesale markets. Those have the Gulf at $238 and Midwest terminals at $272.