Inputs Market Update: Fertilizer and Fuels Resume Downtrend

February 9, 2016 12:23 PM

Gains tallied 41 cents to Declines' $12.15 in the regional averages.

AnhydrousFertilizer resumed its downtrend this week led by declines in MAP and anhydrous ammonia. UAN28% is our only nutrient this week with a higher price tag, although UAN32% is unchanged on the week. Price increases were scattered thinly across our survey and were all less than $10.00 per short ton. Grain prices took another hit to open this week, and USDA's Tuesday S&D reports are not expected to give bulls much fuel for an upside fire.

As long as fertilizer prices want to continue lower, we will not get in their way. Declines in MAP have been a long time coming, and wholesale values suggest continued softness for phosphate. Potash prices fell again this week with Ohio posting the largest increase at $1.83 higher per short ton on the week. Ohio led increases in urea as well with a $2.57 per short ton price increase.

RubyDiesel prices continued lower as WTI crude failed to impress to the upside. Heating oil futures held above $1.00 even as WTI opened the week with a run back below $30 per barrel. Demand for winter home heat will continue to add support to heating oil futures but with farm diesel down to $1.45, according to our analysis, front-month heating oil only needs to firm to $1.12 in order to influence farm diesel prices higher. As that margin thins and spring fieldwork nears, we expect farm diesel to firm slightly.

Last week, no state posted a firmer price on farm diesel with five states lower and seven unchanged. This week, ten states posted a lower price with only two unchanged. If heating oil futures dip back below $1.00 the margin between front-month heating oil futures and farm diesel will widen, suggesting more downside potential for farm diesel. We will have more on that in this week's Farm Fuels on Focus.

PotashFor the time being, stay hand-to-mouth on diesel. Nitrogen and potash should be considered a value and may be leveling off at current price levels. We will look to book spring and summer nitrogen and potash in the next few weeks but will wait for signs the market has bottomed before pulling the trigger. Increased Chinese phosphate manufacturing and improved production fundamentals may pressure phosphate between now and spring. Hold off on booking phosphate for now, but we do recommend you help out your preferred retailer by staying in touch about your expected spring P needs. That will help dealers avoid supply crunches when spring demand ramps up.

Corn Futures -- December 2016 corn futures closed Friday, February 5 at $3.89 putting expected new-crop revenue (eNCR) at $611.88 per acre -- lower $6.72/acre on the week. With anhydrous priced at $583.96 this week, the eNCR/NH3 spread narrowed 4.08 points and now stands at -27.92. This means one acre of expected new-crop corn revenue is priced at a $27.92 premium to one ton of anhydrous ammonia.

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Nutrient/Fuel
1/25/16
2/1/16
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$591.70
$586.60
-$2.64
$583.96
Anhydrous
DAP
$499.49
$499.58
-$1.23
$498.36
DAP
MAP
$515.91
$516.74
-$4.58
$512.17
MAP
Potash
$381.21
$382.15
-$1.54
$380.61
Potash
UAN28
$276.74
$276.28
41 cents
$276.69
UAN28
UAN32
$312.05
$310.33
Unchanged
$310.33
UAN32
Urea
$373.01
$373.32
-$2.04
$371.28
Urea
Farm Diesel
$1.59
$1.56
-11 cents
$1.45
Farm Diesel
LP
$1.02
$1.02
-1 cent
$1.01
LP
Composite
602.73
602.98
-2.07
600.91
Composite

 

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