While retail fertilizer prices moved mostly lower last week as some retailers updated offer sheets for fall, wholesale costs tried to stabilize on the heels of this summer’s break.
Ammonia broke sharply at retail price points, following a steep drop in costs into August that’s percolating down to the farm gate level. Our average retail ammonia price tag fell around $18 to $408. But more cuts could be coming, because that average is still some $27 higher than our fair value projection based on wholesale expenses. Some dealers on the southwest Plains dipped below $300 and USDA’s survey in Iowa put the cost at $408 there. August contracts at the Gulf settled at just $172, nearly $20 below last week’s close for urea. Historical relationships between urea and ammonia suggest anhydrous could have up to $50 upside if the market gets back to its normal premium of 83% over 46%.
Urea headed in different directions last week depending on the market. Retail charges slipped more than $5 on average to $283.50 as retailers in Iowa cut their charges to $303. Dealers on the Plains remain cheaper, but they’re headed in the other direction after slashing prices earlier in line with big reduction on wholesale markets. New prices out west are in the $250 to $280 range. Current retail prices look cheap according to historical standards, so increases likely are in order. But swaps into winter don’t show much upside pressure at the Gulf, maybe $5 more than the $190 settlement on Friday.
UAN followed the rest of the nitrogen complex lower, easing on both wholesale and retail markets. August swaps at the Gulf for 32% settled at $121.50, down a buck, but contracts into winter are $10 to $12 higher, suggesting a market trying to steady. Retail costs, on the other hand, reset lower as dealers price inventory after the wholesale break. Our average retail cost for 28% came in down $5 at $217, getting closer to our target in the low $200s. A few dealers are there on the Plains.
Phosphates were quiet again last week in a complex that’s not making much noise. Retail DAP was mostly steady around $423.50 in a market that has just a $30 range. Those costs look cheap by historical standards, given the current price at the Gulf of $317.45, which was down $1.55 last week. But swaps show easing values into the end of the year, suggesting limited upside risk too. Interruption of shipments out of North Africa and the Middle East is always a possibility, due to weather or politics, both of which can be volatile.
Potash prices eased a bit last week at the retail level, with our average off $2.50 to just over $325. That still looks expensive given current wholesale costs, but most dealers are still above our $300 target.