Inputs Market Update: Anhydrous Firms

December 7, 2015 03:47 PM

 

Gains tallied 47 cents to Declines' $23.68 in the regional averages.

1272015UANFertilizers continued lower this week with one notable exception -- anhydrous ammonia firmed 45 cents on the week. Price moves have been very small over the past few weeks as the downtrend started in late August continues. Were it not for sharp increases in South Dakota NH3, anhydrous would have been lower along with the rest of the segment. NH3 has been in the mid-$640's for several weeks. The implication is that anhydrous has bottomed, but the rest of the fertilizer segment, with the exception of potash has been chasing anhydrous lower through the duration of the current downtrend off the August highs.

Phosphate is acting as phosphate does. One week, DAP will fall about ten bucks and then retrace most of the decline with an upward move in the following week or so. With that, MAP has made counter moves that in many ways mirror DAP's price moves. In other words, one week, DAP falls and MAP firms. In the following week, MAP falls as DAP firms. This seesaw action is due to expenses related to imports and to variability in phosphoric acid prices for manufacturers. This week, DAP and MAP actually moved in the same direction. We have seen acid prices calm down a bit and this week's phosphate price action may be an indication that phosphate is set to correct to a price that better reflects anhydrous prices.

Potash is still oversupplied globally and will likely continue slightly lower although, as with anhydrous, this week's potash price action is driven in large part by a single state. Wisconsin potash fell $41.30 and joins Missouri and Michigan in three-handle territory. We believe more states will dip below $400 per short ton in the coming weeks.

1272015DieselDiesel prices continued to trend lower this week. Seasonal maintenance is complete and with crude oil prices slipping lower in today's trade, we look for lower diesel prices ahead. Michigan and Indiana urged propane higher and along with Illinois account for all of the price increases in this week's survey. Cold weather will support higher LP pricing, but since this winter has been mild thus far, record national supplies will continue to limit the upside in propane.

Corn Futures -- December 2016 corn futures closed Friday, December 4 at $4.03 putting expected new-crop revenue (eNCR) at $639.95 per acre -- higher $22.01/acre on the week. With anhydrous priced at $645.45 this week, the eNCR/NH3 spread narrowed 21.57 points and now stands at 5.50. This means one ton of anhydrous ammonia is priced at a $5.50 premium to expected new-crop revenue per acre.

Using USDA's January yield peg of 171 and steady basis, expected new-crop corn revenue based on December 2015 futures at Monday's open at $3.75 totals $641.25 per acre.

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Nutrient/Fuel
11/23/15
11/30/15
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$645.16
$645.01
44 cents
$645.45
Anhydrous
DAP
$547.99
$538.56
-$4.03
$534.53
DAP
MAP
$564.59
$565.42
-$9.71
$555.70
MAP
Potash
$419.92
$418.25
-$5.98
$412.27
Potash
UAN28
$293.80
$293.97
-20 cents
$293.77
UAN28
UAN32
$318.47
$318.08
-15 cents
$317.94
UAN32
Urea
$415.45
$414.49
-$3.58
$410.91
Urea
Farm Diesel
$2.00
$2.00
-4 cents
$1.96
Farm Diesel
LP
$1.01
$1.01
2 cents
$1.03
LP
Composite
658.47
656.25
-4.56
651.70
Composite

 

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