Phosphoric Acid, Phosphates & Fertilizers Experts

Fertilizer Outlook – River delays added to tense fertilizer market

International prices for nutrients sink but farm costs keeping trending higher.

While the international fertilizer trade continues to show signs of a seasonal top, retail prices for U.S. farmers moved higher again last week. Season demand coupled with delays shipping last-minute supplies up a flooded river system took farm gate costs higher again.

Ammonia costs are running $500 or more in many areas as the spring application season gets underway despite lower international prices and rising U.S. production. Our average cost gained more than $1.50 a ton to $489, but reflects sheets at some dealers who made purchases when wholesale costs were lower. USDA’s latest surveys in Iowa and Illinois last week both topped $500, and even dealers lowering prices last week were already above that benchmark. Higher prices for farmers come even after contracts at the Gulf for March settled at $277, a level that suggests replacement values could be as low as $430 when dealers restock.

Urea was at least $2 to $4 cheaper at the Gulf last week, with talk of some deals being done at even greater discounts as global buyers stepped back from the market waiting for better deals. Swaps trade shows prices falling another $20 into summer, but don’t look for discounts at your local dealership. Our average retail price jumped another $6.35 last week to $359, the highest it’s been in two years. That’s still $30 less that fair value if product was bought at the Gulf and moved into position now. USDA put Illinois and Iowa at $370 and $390, with dealers on the Plains with new offers at $355 to $375.

UAN followed the rest of the nitrogen market last week, pulling back at wholesale markets from one year highs. Though the Gulf index was down only 50 cents to $183 for 32%, swaps for July are down to $150. Retail prices should follow that trend eventually for summer refill, but for now they’re moving higher as demand takes dealer charges higher. Our average price for 28% rose nearly $6 a ton to top $229, a price that still looks below the cost of replacement value. Indeed, dealers posting new offers last week on the Plains were more in the $242 to $245 range, with USDA putting Iowa all the up to $277.67.

Phosphates moved higher over the winter on the rising cost of their nitrogen component, and that trend is still in play as spring begins, at least on the retail side. Our average cost for DAP was up $10 to $472, with new offer sheets running $455 to $495. Fair value for June is down to $442 based on the swaps market, which shows costs at the Gulf easing. The Gulf price for DAP las week was down around 50 cents to $376.50, so that trend could be in play already.

Potash costs also edged higher again last week for growers as supplies in position remain tight. Our retail average cost is running at $339.50, up nearly $2, though the price at Corn Belt terminal prices held steady at $272.