International markets weak on prospects for lower prices into summer.
Farmers are finally getting their first good window for planting this spring. But the increase in fieldwork didn’t affect fertilizer prices much last week. Near-term demand doesn’t look ready to last long, opening the door for cost reductions into summer.
Ammonia as expected adjusted lower for May contract settlements at the Gulf, which were down $18 to just over $231 a short ton. That suggests growers may be able to book product for fall applications this summer at $400 or below, with our projection based on historical costs ranging from $363 to $421. The low end of that range is $130 below the average retail spot price last week and close to the manufacturer’s price on the southwest Plains. The Gulf contract cost is down around $90 from January highs, so there’s potential for reductions at retail, which have only started to ease. Watch the tone on urea, which usually sets the pace for the nitrogen complex.
Urea was mixed last week. Wholesale markets firmed on hopes for increased farmer demand but retail prices moved lower as dealers restocked inventory at lower values reflecting the drop on international markets over the spring. Our average retail value dropped $3.50 to $352, with current offer sheets in the $325 to $370 range. Current prices appear very close to our replacement cost projection of $357, after Midwest terminals rose $5 to $265, tracking a $4 increase at the Gulf to $224.The move higher isn’t expected to last long: Swaps for July-September are $15 to $20 lower, which could take the average retail price to $330 or below. Still, prices aren’t likely to come under anywhere near the same type of pressure as they did in the summer of 2017, when costs fell to multi-year lows, thanks to stronger crop prices.
UAN rose steadily this spring on ideas late planting could boost demand. The market finally cooled off a bit last week, following a previous decline by wholesale values that reflected the weaker tone in the rest of the nitrogen complex. Average retail prices for 28% were $3 lower at $235, though that may still be cheaper than replacement value, at least for now. The price for 32% at the Gulf was steady at $176, but swaps show a drop to $148 by July. While that’s up a little, it still means growers may be able to lock in supplies of 28% around $205.
Phosphates moved higher on wholesale markets last week, reflecting stronger demand in the U.S. and globally. While our average cost for DAP dropped about $1.25 to $487, values at the Gulf were up $3.50 to $388.50. Still, average retail values appear a little over-valued, with our projection of replacement cost at $481. Swaps point to lower values into fall, which could take the average retail price down to around $450.
Potash remains the market with the least changes though there were a few adjustments last week. Our average retail price edged higher to $342.50, despite a $2 drop at Corn Belt terminals to $270. How much you pay is a function of dealer markup and transportation, which normally adds $50 to $100 to the bill.