Low crop prices mean fairly reasonable fertilizer prices as growers book supplies for 2018 production. But the August plunge on the board hasn’t translated into a reduction in nutrient values, which show signs of trying to move higher into fall
Ammonia appears to be trying to hold on international markets following a big break this summer. Retail costs are still adjusting lower as dealers reset offer sheets, with potential for increased fall applications this year. Our average retail cost for ammonia is down more than $7 this week to around $400.50, but growers in many areas are doing better than that. Our projection of fair value based on the Gulf index of $172.35 is around $381. Some offers on the southwest Plains are below $300, with most in the $315 to $345 range right now. Production in the U.S. is on the rise, that’s mainly just replacing lower imports, which were down 11% in June.
Urea pulled back a couple dollars in the swaps market this week, but overall costs continue to point higher. Values at the Gulf were up another $10 last week to $198.50 and swaps into fall are a few dollars higher than that. This suggests retail costs could run around $345 into winter. Our average is only $284, but reflects suppliers who haven’t updated offer sheets since the move higher took hold internationally. New prices on the southwest Plains are in the $250 to $280 range, up $10 to $15. Terminal costs are also higher in the Midwest, where prices tend to be more expensive too. As with ammonia, imports are down, falling 7% over the past year compared to the previous 12 months.
UAN looks like it’s trying to carve out a bottom too at the wholesale level, where the Gulf index for 32% moved up $1 this week to $122.50. Swaps for October are up to $136, so higher costs appear more likely than not after hitting multi-year lows. Our average price for 28% was unchanged at just over $217. Growers should push for $200 from dealers with supply but that may be getting out of reach as the market’s tone firms. UAN imports were down 25% in June, according to Census data.
Phosphates continue to show signs of firmness. While the retail cost of DAP was unchanged around $423.50, the expense at the Gulf was up $5 to $322.50, which translates into fair value around $465. That suggests higher costs after retailers take delivery on new supplies, due to increases internationally over the summer.
Potash saw little price movement at the retail level last week, but wholesale costs firmed as inventories remain fairly tight. Most of that supply is imported, and international buyers have turned a little more active. Our average retail cost of $325 is $25 above fair value based on wholesale costs, but Midwest terminals were up $4 last week to $253. Potash imports were up 28% over the past year as growers took advantage of lower prices.