Growers betting a break in nitrogen prices for fall applications may have rolled snake eyes. Harvest delays could shift demand for ammonia into high gear, just another tender from India hit the market this week to firm costs.
Ammonia looks like it could cost $500 or more on average, especially from dealers restocking supplies in November. While the benchmark used to settle contracts at the Gulf was unchanged from October at $322 a short ton, wholesale costs up the pipeline rose again and are now $135 to $150 above lows hit this summer during the demand lull after spring planting. Corn Belt terminals and plants are running $470 to nearly $500, and farmers can typically tack $50 to $100 on to that depending on transportation costs and dealer markups. Even on the southern Plains, where costs tend to run around $30 to $70 less, ammonia could be $460 or more on new offer sheets, with some locations there already above $500. While imports in September fell 23% from year-ago levels, exports were scant so net shipments were down around 9%
Urea kicked off the rally this summer, but costs finally cooled down on wholesale markets in the second half of October. That lull is over, at least for the next two weeks, while traders wait for results of the latest big tender from India. A lot of offers were made at the country’s last purchase that eventually burnt out the rally. But sanctions on Iran could keep supply from that producer off the market. Urea swaps were up $2.5 a ton at the Gulf for November, with December up $4 after the news broke on Tuesday. Gulf urea fell another $6 last week to $242.45, with upriver terminal costs also easing. Still, retail costs are likely to run $400 or more for now. Urea imports in September were up nearly 30% year-on-year, with net supplies boosted by a drop in exports too.
UAN appeared steady last week, though swaps at the Gulf did edge a little higher after the India deal hit the wires. With the index for 32% closing at $217.50 last week, the price of 28% could run as much as $300 for dealers restocking now, though interest appears limited. Supply may be available for closer to our average retail price of $240, which could be a good value for those who can store it.
Phosphate costs also drifted lower last week, with the Gulf index for DAP down $1.50 to $416. Costs pulled back along with the nitrogen component of prices, but retail values barely budged in the meantime, with the average staying around $515. Demand could be the question now, as farmers wrestle with break-evens that are in the red across the board for 2019 crops.
Potash held steady last week, though some terminals boosted prices a little, taking the average up $1 to $319 in the Midwest. Costs at the Gulf were officially listed as steady at $291, but reports suggested they might be $5 to $10 higher as demand seems to be good. That could take updated offer sheets to $400 or more, though our average was unchanged at $368. Potash imports were up 12% in September, though export rose too.