Prices across the fertilizer complex remain soft as June ends, with little indication July will be much different. Growers should continue to press for the best deals in what is a buyers’ market.
Ammonia contracts for July at the Gulf settled $22.50 lower, the lowest since October, with the slump coming right on schedule for normal seasonal weakness. Our average retail price slipped $5 to $469, but that figure masks some offer sheets that haven’t changed since spring. New prices listed on the southwest Plains are running $395 to $415, with USDA’s surveys in Iowa and Illinois last week putting the low end of the Corn Belt market around $435. That’s getting closer to our projection of fair value based on current wholesale costs, which comes in at $426.
Urea showed flickers of an attempt to stabilize earlier in June, but those embers of a rebound may be dying out. Costs at the Gulf dropped to $162.50 last week and some traded at $160. Swaps for the rest of the summer into fall remain a little higher, with the best market now in the U.S. for exporting those cheap supplies overseas. Production continues to come on line here in the U.S., with the rally in wheat so far not doing much for nitrogen. Retail costs average around $305, which looks in line with fair value based on the Gulf index, though Plains offer sheets are in the $265 to $295 range.
UAN in the spot market remains under pressure, but the deferred contracts for late summer we’ve been talking about are still firm. That suggests growers should be working hard now to lock in supplies for late summer-early fall. Our retail average for 28% fell to $225 this week, but fair value based on deferred contracts continues to point to $200 to $205 as a more realistic cost. The Gulf index for 32% slipped $9 last week to $130, with those deferreds at $122.50.
Phosphates held firm on both retail and wholesale markets last week here in the U.S., though the tone internationally is soft. China is selling DAP again and demand overseas is lackluster. The cost of DAP at the Gulf ended last week around $311.50, and swaps into fall are little different than that. The current wholesale index translates into a retail price around $445, above our average, though few offer sheets have changed lately. So securing product around $425 looks decent right now.
Potash prices ebbed a little lower on wholesale markets last week, but little change was noted on the retail level, where the average price remains around $325. That still looks too high given wholesale costs running around $205 at the Gulf and $250 at terminals in the Midwest. Our buying target remains $300 for the typical producer.