Phosphoric Acid, Phosphates & Fertilizers Experts

Fertilizer Outlook – Nitrogen costs keep rising

Low crop prices don’t deter world farmers from buying fertilizer.

Nitrogen prices moved higher last week, and increases could continue into November. Good demand from South America and India continues to firm a market where supplies suddenly look a little short. Better weather in the U.S. after a slow start to harvest and winter wheat seeding could also stimulate some buying here.

Ammonia edged a little higher at the retail level, and wholesale prices likely will reset higher based on the move in urea recently. While our average retail cost for anhydrous is just over $375, dealers adjusting prices now could push that $50 or more. And that projection should rise when November contracts are settled. Dealers on the Plains updating price sheets last week were already some $85 off summer lows. Growers looking to lock in ammonia for spring likely will have to wait until winter, unless they can find leftover supplies this fall.

Urea followed its recent turn higher with another jump last week that took prices at the Gulf another $12.50 higher. And the $245.50 index price is likely to add $12.50 more to that for November, with December swaps all the way up to $265. That translates into an average retail cost near $400, compared to our current retail benchmark of $305.60. Retailers raised their prices on the Plains last week with the new offers anywhere from $5 to $30 higher. Those new prices are running $320 to $325, $75 off summer lows. India closed its latest tender last week and didn’t attract as many sellers as were around this summer. Chinese producers have cut production in part of the country’s anti-pollution campaign and are selling what they do make to farmers there rather than export it.

UAN showed a similar pattern to urea. Retail and wholesale prices moved higher with prospects strong for more gains into winter. Retail price changes were quiet this fall, even as wholesale costs started to firm on the urea rally. The index for 32% at the Gulf rose for the fourth straight week, settling at $147, up $7. Our retail average foe 28% edged a dollar higher to $209 and likely will move higher soon. Fair value is already around $230 based on the wholesale market, and swaps show higher prices ahead that could take 28% to 250 by January if current trends hold.

Phosphates haven’t seen much volatility over the summer and fall. But the overall trend on the wholesale market for DAP was a little higher. Prices firmed $2.50 at the Gulf last week to $324, but swaps for December are $5 lower. Our average retail price for DAP was up more than $1 to $427.50. Dealers restocking could bump prices $40 higher than that, so securing costs at today’s prices may be preferable to waiting.

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.