Phosphoric Acid, Phosphates & Fertilizers Experts

Fertilizer supplies remain plentiful

Nitrogen prices vary as new fall offers posted.

Like politics, fertilizer prices are local too. Some suppliers near plants and big terminals change prices frequently. Other dealers only post new offers ahead of major application in the spring or fall. But prices on global markets for N-P-K appear relatively stable, held back by low crop prices and abundant inventories.

Ammonia is the best example right now of the “all things local” principle. On the southwest Plains, anhydrous typically costs $100 or more less than in the central Midwest. Some dealers in Kansas and Oklahoma raised offers last week by $5 to $10 – but from multi-year lows in the $300 to $320 range. Some Illinois dealers posting fall prices showed a dramatic drop from winter, when prices were nearly $100 higher, but still are running around $380. Our average price is around $392, about $10 above our projection of fair value based on the August swaps settlement of $172.35. Production in the U.S. has expanded, thanks to cheap costs for natural gas, the primary feedstock for nitrogen fertilizers. But the U.S. is selling more of that overseas. Imports through June are down 14% while exports in the first half of the year jumped more than seven-fold.

Urea is another market with “different strokes for different folks.” U.S. costs at the Gulf followed world markets higher, rising more than $25 off multi-year summer lows. Rather than pay up, large importer India backed away from holding another tender. The Gulf price eased $1 last week to $197.50, and forward contracts though spring of 2018 are fairly steady around that benchmark. Retail prices farmers pay here in the U.S. are still drifting lower, catching up to this summer’s break and don’t reflect the recent wholesale rally. With river terminals at $223 or average price of $281.50 looks cheap. But some dealers are starting to raise offers too in line with what they’re paying for refills.

UAN costs farmers are paying appear to have gotten the message about higher prices. Our average retail cost for 28% moved up more than $3.50 last week, and at $221 it looks expensive compared to current wholesale costs. But those costs are going up, according to the swaps market for 32% at the Gulf. It points to November retail prices for $217. Some dealers posting new offers on the Plains are still around $205, close to our current projection of spot market fair value. But that’s getting to be the low end of the market.

Phosphate production in the U.S. isn’t increasing. It fell 1% in the first half of 2017 compared to 2016. But producers around the world are ramping up sales. That includes China, which increased exports significantly this year. Demand appears to be up, too, so prices have been flat. The Gulf cost for DAP hasn’t budged more than $15 since planting began in the U.S., and our average retail costs shows even a smaller price range. It’s at $424. That looks cheap, compared to wholesale charges, because few prices have adjusted recently. Those that did last week moved higher. The swaps market shows the Gulf falling $20 by the end of the year, so it doesn’t look like prices are going anywhere too fast.

Potash has also flat lined at the retail level. Our average did tick 50 cents lower to just under $325. But that remains around $25 higher than our projection of fair value based on terminal costs in the Midwest, which eased to $253. North American producers, mostly in Canada, increased production by 15% in the first half of 2017. But demand is up around the world, so their inventories fell 13%. U.S. farmers took advantage of lower prices to boost imports, too.

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