Dealer prices likely to follow international market higher.
Growers needing fall nitrogen should be pushing for deals before harvest to avoid likely higher prices later this fall. The fertilizer market globally has a firm tone despite crop prices that remain sluggish.
Ammonia continues to get cheaper on average at the retail level as dealers reset price sheets for fall. But with September contracts higher at the Gulf and a firm tone internationally, suppliers may raise offers sooner rather than later. Our average retail price last week dropped $15 with lowers prices noted from Missouri into Iowa and Illinois. The low end of the market in the central Corn Belt is around $335 to $345 with the southwest Plains down to $310. Some dealers in Kansas and Oklahoma have already raised prices after the increase on the Gulf, which took the index to $195. That suggests fair value at retail above $400, more than $30 above this week’s average retail cost of $370. So the path of least resistance is higher.
Urea looks ready to extend its late summer rally into the fall, with both wholesale and retail prices higher last week. Spot trade at the Gulf was around $222.50, more than $60 off summer the summer bottom that hit the lowest level since 2003. Forward prices into fall are around $10 higher suggesting the rally is ready to keep going as sellers have been successful in raising offers thanks in part to good demand and lower exports out of China. Our retail average this week is just $286, up only $2, but new offers are running mostly $300 or above with some $345 or higher.
UAN prices moved close to our buying target last week, with the average cost of 28% down to $208. With fair value just $3 less, those wanting to lock in supplies may be able to do so at a value that could be significantly less than waiting. While the spot price of 32% of the Gulf is $124, swaps for the end of September are $7 higher and winter contracts are at $154. Other nitrogen costs are on the rise and UAN is no exception. Wholesale prices are only $2.50 off their summer lows so those who can move quickly may be able to avoid higher charges.
Phosphates also had a firm tone last week. In addition to international demand, Hurricane Irma slammed through the phosphate mines of central Florida, freezing production there. While the Gulf price was listed at $318.50 for DAP that looked $10 or more cheaper than talked about trade. Average cash prices remained flat lined at $424, which seems around $40 less than fair value based on wholesale prices. Abundant global supplies should limit potential for big price increases, but Irma showed by supply chain disruptions can impact the market at any time.
Potash moved lower at the both the retail and wholesale level last week, with quiet world markets waiting to see how fall buying develops in the U.S. With the Midwest terminal price at $254, retail costs are a function of dealer markup and transportation. Our fair value average is still below $300, but average cash prices are hovering around $320 as some dealers have not reset prices recently.