Wholesale markets remain mostly very soft but retail prices stay firm.
Fertilizer is a tale of two markets headed into spring. While retail costs remain fairly firm after slow fall applications, wholesale values continue to head lower for many products. That means growers still looking for supplies may be forced to bargain hard and search far and wide for good prices to avoid a supply chain that could be squeezed in the months ahead.
Ammonia prices remained steady on wholesale markets last week, and dealers changing offer sheets firmed values. With much of the Corn Belt very wet, there may be precious little time for fieldwork this spring, so dealers see the risk of holding too much inventory that may go unused. That’s keeping prices at Midwest terminals and retail outlooks at values that look much too expensive compared to the cost of replacing supplies. Based on the February settlement for Gulf contracts of $259, an average ton of ammonia upstream should cost around $465. Fundamentals also point to prices below $500. But our average cost ticked higher to $570 last week and many dealers outside the southern Plains are at $600 or more.
Urea is usually the bell cow for the nitrogen market, and if that’s true retail costs also look much too expensive. The Gulf index slipped $8.50 last week to close at $239 and the Black Sea has lost $30 a metric ton over the past two weeks. Rising imports and domestic production mean plenty of product is around, if growers can get a hold of it. Our average retail price dropped $1 but is still overvalued at $384.50 – replacement cost looks $40 or more less. Dealers lowering prices on the southern Plains the last two weeks are down to the $350 level, which is closer to the mark.
UAN could see more interest from growers this year, from those switching products for later applications or saving money by spoon feeding. That could increase demand later this spring, but so far prices are following urea lower. The index for 32% at the Gulf last week was down $9 to $182 and river terminals saw a similar decline. Our average retail value for 28% dropped $3 to $266, though there’s not a lot of changes this early in the season. Replacement cost is around $246 to $252, so the market is not too far out of whack, mainly because new offers weren’t posted over the fall and winter.
Phosphates continued their tailspin last week at the Gulf, where DAP dropped $7 to $355, more than $60 off fall highs. Retail prices remain steady to higher, with most running around $520, a level that looks $75 above replacement cost. The falling cost of the nitrogen component of products coupled with slow demand should lower prices eventually, but time is starting to run thin.
Potash held firm on wholesale markets last week and retail offer sheets continue to ratchet higher as new prices are posted that reflect the rally over the past two years. Our retail average is up to $380.50, which actually looks a little cheap compared to replacement costs. The Gulf was steady last week at $287 with Midwest terminals at $325.