Most fertilizer dealers don’t update offer sheets often, because they aren’t in the business of constantly buying and reselling products. It’s a seasonal enterprise, just like agriculture, and now is the season to be buying. Whether it’s for immediate shipment into on-farm storage or for fall delivery and application, buying now avoids a potential rush later because lots of fields need replenishment.
Ammonia looks like it’s bottomed at wholesale markets, with August contracts at the Gulf steady at the July settlement of $195. And some retail locations are closing in on our forecast “fair value” price around $415, with those able to buy direct from terminals significantly lower than that. Our average retail price finally broke below $500 though some dealers still haven’t posted new prices yet. While the U.S. is producing more ammonia it’s also importing less. Net imports through the first half of the year are down 29% from 2018. That increases potential a bottom is in.
Urea also appears to be offering decent values. Dealers updating offer sheets recently are at both sides of our projected forecast price of $370 based on costs in the wholesale market. Growers on the southern Plains close to plants have the best chance of beating that benchmark, while those further east remain higher. Our average cost dropped $10 this week to just over $400, but reflects some locations with old offers. Costs at the Gulf edged higher last week to $260 and swaps show only slightly higher into winter until a move above $270 next spring. So dealers should be able to offer some protection for those who won’t be needing product until 2020. Imports in June plunged and are down 10% of the year, keeping supplies from building too much.
UAN also dropped last week as manufacturers get serious about offering new supplies to refile the supply chain. Retail prices still have aways to go after UAN became the product of choice for growers unable to apply nitrogen in the fall or spring but were down $5 on average last week to $255 for 28%. The Gulf cost of $147.50 for 32% looks set to rise in September to $159, which translates into a retail price of around $220 for 28%, a value some dealers are offering. Exports jumped in June but are still down 42% year-to-date from 2018.
Phosphates are still searching for bottom after a poor application season increased supplies headed into the fall. The Gulf price of $302 for DAP is closing in on its 2016 lows, which suggests room for retail prices to fall more. Current wholesale costs translate into a forecast retail price around $440, a level some dealers are already undercutting, so growers could be in a good bargaining position.
Potash prices are starting to slowly edge lower as new offer sheets reflect the $30 pullback in wholesale costs since the end of winter. With the Gulf down $1 this week to $249, our forecast average retail value is $369, a level some dealers have already hit.