Phosphoric Acid, Phosphates & Fertilizers Experts

Fertilizer Outlook – When will farmgate fertilizer costs finally fall?

Ammonia prices tumble again in international markets.

Ammonia became the latest example of an international fertilizer market in retreat last week. But so far only fleeting signs of a pullback are showing up the supply chain to the farmgate level, where most costs are steady to higher.

Ammonia contracts at the Gulf for April settled another $27 lower, taking that benchmark price for nitrogen down to around $249.50. But more farmers still trying to buy anhydrous are paying twice that amount, despite forecasts for a cold, wet spring and falling corn acres in the U.S. Our average price for ammonia ticked a dime lower but still remains above $491.50, a full $100 above replacement cost if supplies could be secured at the Gulf and moved into position, given normal historical price relationships. The pullback in wholesale costs is indicative of a global market that’s weak, even though some production out of the Caribbean was curtailed. While some offer sheets in Illinois are around $445, USDA put the average there last week steady at $522, while Iowa was down $2 to $507. On the southern Plains costs continue to run $500 or better as well for recently updated offers.

Urea continues to have a weak tone on wholesale markets. But retail costs were up around 50 cents to $360.50 on average last week. Recently updated offers sheets run anywhere from $340 to $400 or better, though our fair value based on wholesale costs is at $375. Wholesale costs have started to trickle lower due to weak international demand. Swaps trade for the Gulf last week saw steady weaker prices into summer, though August settled only $17.50 lower than the spot month ahead of the holiday weekend.

UAN again showed the firmest tone in the nitrogen complex as farmers think about spot applications or shifting products depending on their weather outlook. While the wholesale market continues to suggest lower prices later this summer, our retail average for 28% was up more than $1 to $231.50. That’s still below fair value replacement cost, considering a Gulf index value of $184.50 for 32%, and updated offer sheets on the Plains last week were running $235 to $240 for 28%. Swamps for August are sharply lower, which could take prices for late summer and fall wheat application down near $200.

Phosphates also showed a stronger market at the retail level last week, with our average charge for DAP gaining around $7.50 to $481. That’s about $10 above replacement fair value based on the wholesale market, suggesting some local supplies are tight. New offer sheets on the southern Plains popped to $500 to $510. Costs at the Gulf were steady at $381.50, with April $5 lower and July all the way down to $345. That could take summer retail prices down to the $430 level, about what growers were paying a year ago.

Potash costs remained firm last week, edging $1 higher on average at retail markets and at the Gulf. The average Gulf value of $238 translates into an average retail charge of $348. While our average moved above $341.50, more offer sheets are running at $350, $78 above the Midwest terminal price.