Lower ammonia prices may not translate into cheaper costs in time for growers.
Nitrogen prices showed more signs of weakness on U.S. wholesale markets last week. But whether that move comes soon enough to impact spring retail fertilizer expenses for growers is still in doubt, especially with grain markets rallying.
Ammonia contracts at the Gulf for March settled $31.75 lower, and the $277 value could eventually trim current retail costs by $50 a ton or more. But retail prices are still rising, with our average up $3 to $485 last week as more growers face a $500 bill to obtain new supplies. While ammonia appears oversupplied around the world currently, that surplus has not yet flowed to urea plants overseas, where the market is tighter. Here in the U.S. higher nitrogen costs could influence acreage choices. The soybean to corn ratio in futures edged a little lower last week but beans still enjoy better profit margins in many areas.
Urea also was a split market last week. Global prices moved higher from the Black Sea to the Mediterranean on the heels of India’s latest big purchases. Values at the Gulf lost 50 cents to $253.50, levels that could encourage exports but are unlikely to attract a lot of new imports. The current cost at the Gulf translates into an expected retail charge of $400, and retailers raising offer sheets last week moved closer to that forecast. Their average rose nearly $7 a ton to $352, the highest in almost two years. And those setting new prices were higher, with the southwest Plains running $345 to $365 and costs to the east higher – around $363 to $381 according to USDA’s surveys in Iowa and Illinois. The swaps market for the Gulf shows prices starting to ease in April but near-term deliveries could be complicated by high water on the river system slowing traffic and raising barge freight.
UAN costs extended their seasonal move higher, responding to the winter rally in nitrogen and increasing farmer demand as more growers get serious making decisions about side dressing and spoonfeeding. Costs at the Gulf for 32% rose another $2 to $180.50, which could take the price of 28% at the retail level towards $250. While the average is only $222.50, that was up $6.50, with updated offers in the $230 to $240 or better range. Swaps show prices at the Gulf starting to ease next month a little, with further reductions into summer.
Phosphates should benefit ultimately from lower nitrogen costs, but that’s not happening yet. The price of DAP at the Gulf rose another $1.50 last week to settle at $378.50 and retail values followed suit. Our average was up more than $2 to $461, in a market that remained fairly priced. New offers are in the $470 to $480 range, reflecting the move higher over the fall and winter. The swaps market for the Gulf shows prices down nearly $20 in April, with the market falling another $15 into July, which should help for fall purchases.
Potash costs continued to creep higher for growers, on a market that’s fairly tight. Our average retail charge went up $2 to $335, with more dealers around $350. That’s close to fair value based on wholesale costs at Midwest terminals that were unchanged at $273.