Phosphoric Acid, Phosphates & Fertilizers Experts

Fertilizer Outlook – Brace for nitrogen sticker shock

Global urea costs finally ease from highs but ammonia rockets higher.

Growers still waiting to book nitrogen for either fall application or for tax reasons might get a pleasant surprise – or more likely, a rude awakening. Dealers resetting prices will likely pass on sharply higher wholesale costs caused by the big rally on global markets this fall. But producers might still find a bargain or two from dealers wanting to get rid of inventory purchased before the big price spike.

Ammonia contracts for November at the Gulf settled a whopping $54 higher. The third straight monthly hike took the index to $276.65, more than $104 above summer lows. The new benchmark translates into a Corn Belt retail average price of around $485, nearly more than $95 above our current average. While retailers have been slow to restock and reset prices due to harvest delays and lower fall applications, offer sheets on the Plains, where the market is more responsive, shows what to expect. New prices there were up $55 to $60 and are $65 to $85 off summer lows. The increases added around $12 on to our average price, which is only at $387. But with updated southwest Plains offers at $365 to $380, Midwest growers can expect to pay at least $100 more in many cases.

Urea finally took a break in from its steady march higher, at least on global markets. After adding $89.50 to costs from June, quotes at the Gulf were down $4 last week to close Friday at $245.50. India’s third, and apparently final, tender of the season brought out a lot of sellers at higher prices, finally taking a little air out of the balloon. Swaps show the Gulf index rising another $7.50 into February, but that’s pretty tame right now compared to what’s happened lately. The lower Gulf price didn’t work up river yet, leaving Corn Belt terminals at $283. Those costs translate into retail charges of $355 to $375 historically. But with many offer sheets not updating our average gained less than $7 to $313. Dealers on the southwest Plains are $45 to $100 off summer lows, with new prices ranging from $310 to $355

UAN remains very quiet on the retail level, but wholesale costs are still moving higher, playing catch-up with the rally in urea. The Gulf index for 32% settled at $157.50 on Friday, with swaps for March more than $15 higher. Current wholesale costs point to a retail price for 28% of $240, $30 more than our little-changed average, and swaps show tack on another $10 through winter.

Phosphates were flat on the retail market for much of 2017. But wholesale costs are starting to ratchet higher. In addition to rising nitrogen charges, sulfur is also more expensive. A plant in Florida is also shutting for a year as imports become more and more important to U.S. growers. The cost of DAP at the Gulf jumped $9.50 last week to $335, which translates to a retail value of nearly $490, $60 higher than the current retail average. Swaps into March could add another $10 to those potential costs, too.

Potash was little changed last week, with our average retail price at $323. That continues to look expensive based on wholesale costs, which suggest fair value at $300 or less for the typical farm buyer.