Blizzards, soggy fields and late harvest could change fertilizer market
Growers hoping to get caught up on fertilizer applications after being stiffed by weather for 2019 crops may have to go back to the Cubs’ old moto: wait until next year. Another famous quote from baseball also looks in play: It’s déjà vu all over again. The implications could have a big impact on your purchasing decisions this fall.
Ammonia turned higher in the international market for October deliveries on ideas farmers would plant more corn in 2020 after large prevent plant acres this year. But a blizzard in the northwest Corn Belt and forecasts for more rain elsewhere may make applications this fall a moot point again. While spot prices at some terminals increased after rolling to prepay offers, the uncertainty over weather appears to be stifling demand already showing signs of cracking in other parts of the world. Some locations on the southwest Plains adjusted prices last week both higher and lower, but our average price stayed right around $490 a ton as costs increased in parts of the Midwest where farmers are making better progress with harvest. While the average looks around $40 more than forecast value, it’s $100 above prepay terminal costs in much of the Corn Belt, which is typical. Prices remain lower on the southwest Plains closer to major plants, with suppliers there around $435 on average.
Urea costs at the Gulf last week broke to $242.50, the lowest level since the “bomb cyclone” hit in March to start seven months of disruption for farmers. The move lower came despite bullish news: another tender from India ending and deadlines for getting barges loaded in order to make it to the Upper Mississippi River before closing. But with high water causing more problems, some parts of the upper Midwest could again face a winter without much to sell unless it’s brought in by train. Our average retail cost of $385 looks around $35 too high based on the current market but doesn’t reflect the recent pullback in wholesale costs. Swaps show only a $5 increase at the Gulf through the winter, so patience may be a virtue if good deals are lacking in your area.
UAN costs ticked $1.50 a ton higher at the Gulf last week, but the retail market remains flat after 28% broke some $25 a ton from summer highs. Demand is slow so few offer sheets are updating. But at current values for 32% at the Gulf of $156.50, 28% looks overvalued at its current average of $239. Some sellers on the southwest Plains are down to $220, which looks like a better deal with swaps into winter showing costs edging $10 or so higher.
Phosphates continue to bleed red ink with prices softening on both retail and wholesale markets last week. The Gulf price is down to $280 a ton for DAP while our retail average slipped to $450. Prices look like they could still have another $25 downside, especially if weather leaves fall demand limited. Supplies seem plentiful even if U.S. production is lower. Swaps for DAP at the Gulf are flat into the end of the year.
Potash could also be hurt by fall weather, one reason another manufacturer announced production cutbacks this month. While retail prices last week were little changed around $381, wholesale values continue to slip, with the Gulf down to $243 and Corn Belt terminals running $282.