Phosphoric Acid, Phosphates & Fertilizers Experts

Fertilizer prices start to edge higher

Fall has begun, and with it the seasonal trend towards higher fertilizer prices. But an uncertain outlook and a later than normal harvest make it difficult to predict how much costs will increase – or in some cases, whether they’ll increase at all.

Ammonia costs at the Gulf rose $27 a ton for settlement of October contracts with trade reported around $231. Costs are now $36 a ton off summer lows but increases at Midwest and Plains terminals has lagged behind Our average retail prices last week slipped to $490 as more dealers reset prices from spring, when the market was much higher. Some retailers are already below our projected price around $450, especially on the Plains where costs are lower. With prepay prices $40 to $50 above the spot, the market expects a move higher, based on ideas farmers will boost corn acreage in line or above Farm Futures survey forecast of 94.1 million. But with corn budgets in the red and a wet fall putting harvest further behind, more nitrogen could go down in the spring.

Urea ticked higher at both retail and wholesale levels last week. But there doesn’t appear to be a lot of momentum for prices to follow the international pattern of higher costs through the fall. That’s left the market fairly valued for farmers booking supplies, with the average retail value of $351 just $10 off our projection based on wholesale factors. Swaps at the Gulf are flat with only a $5 bump for winter.

UAN dropped sharply at retail price points over the last two months, after a late surge when it became the go-to source of nitrogen for farmers who planted corn late and couldn’t get ammonia down. Our average cost for 28% fell nearly $7 a ton last week to $213, which is a few dollars below our projection based on current wholesale markets. The Gulf price for 32% is around $5 off its lows, with swaps suggesting another $5 to $15 through winter. But most farmers don’t worry about the product until spring, which tends to keep retail values flat until that demand kicks in.

Phosphate costs continue to drop as more retailers post fresh offers in line with the huge pullback on the international market. Our average retail price for DAP is just above $450, and that’s about $25 higher than projected based on the current wholesale market. Some retail locations are already below that level after the supply pipeline was caught with leftover supplies because farmers couldn’t get down all the product they planned. That would suggest growers will need to buy more into 2020, but global supplies seem plentiful even if U.S. production is lower. Swaps for DAP at the Gulf show only a small increase into the end of the year.

Potash prices remain flat to a little lower with sluggish demand offsetting production cutbacks as manufactures try to keep the market from further pullbacks. Our average retail value of $390 still looks around $15 too high on average, considering the Corn Belt terminal cost is $286.