Inputs Market Update: Fertilizer Price Downtrend Continues

October 12, 2015 01:38 PM

 

Gains tallied $0.00 to Declines' $41.63 in the regional averages. Fuels were unchanged on the week.

NCIIn an effort to quantify the relationship between harvest progress and fertilizer prices, we looked at last week's sharp declines in NH3 in Nebraska. We found, however, that the correlation has either not yet locked in or does not impact fertilizer prices. Either way, with fertilizer prices in a sharp downtrend, most are less concerned with why fertilizer prices are falling and are content to let them run.

Wholesale values have been far below retail prices and as retailers have resupplied at the onset of harvest, retail prices have fallen to a more appropriate relationship to wholesale prices. How long the downtrend will last is unknown, but as long as we are pointed lower, we will hold off on booking anymore fertilizer for fall or for spring.

UAN32% is our biggest decliner falling $9.60 per short ton. DAP was down by nearly $8.00 per ton and despite firming slightly last week, anhydrous ammonia is down this week as well, falling $4.24 to $657.50.

NH3Temperatures are still quite a bit too warm to actual NH3 applications and that will keep hand-to-mouth demand in check until harvest is closer to complete, and soil temperatures lend themselves to fall nitrogen applications.

Crude oil has been the source of a lot of market chatter during the last few weeks, but for all the blustering the market has done lately, heating oil futures -- where the rubber actually meets the road -- have done nothing to change our opinion that farm diesel prices will hold in place and may even come under mild pressure. For now, book diesel as needed for the time being. We will wait for a clear indication from heating oil futures and distillate supplies that diesel is set to firm.

Propane is still in good supply nationally and since harvest demand for grain drying has been a disappointment in many areas which will limit upside risk on LP for now. As temperatures fall, expect propane to creep higher.

phosphateCorn Futures -- December 2016 corn futures closed Friday, October 9 at $4.07 putting expected new-crop revenue (eNCR) at $641.76 per acre -- lower $4.79/acre on the week. With anhydrous priced at $657.50 this week, the eNCR/NH3 spread widened 1.85 points and now stands at 15.74. This means one ton of anhydrous ammonia is priced at a $15.74 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 $3.81 totals $651.51 per acre.

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Regionally --

Anhydrous softened $4.24 to $657.50; UAN28 fell $1.89 week-over to $301.38; UAN32 fell $9.60 to $327.44; Urea is $5.19 lower at $424.72.

DAP is $7.89 lower on the week at $535.23; MAP fell $7.67 to $567.76; Potash softened $5.15 to $431.24. Farm diesel is unchanged this week at $2.00/gallon. LP is also unchanged on the week at 99 cents/gallon.

Nutrient/Fuel
9/28/15
10/5/15
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$660.44
$661.74
-$4.24
$657.50
Anhydrous
DAP
$542.56
$543.12
-$7.89
$535.23
DAP
MAP
$570.19
$569.25
-$1.48
$567.76
MAP
Potash
$438.96
$436.39
-$5.15
$431.24
Potash
UAN28
$309.26
$303.28
-$1.89
$301.38
UAN28
UAN32
$338.74
$337.04
-$9.60
$327.44
UAN32
Urea
$432.23
$429.92
-$5.19
$424.72
Urea
Farm Diesel
$2.02
$2.00
Unchanged
$2.00
Farm Diesel
LP
$0.98
$0.99
Unchanged
$0.99
LP
Composite
676.23
674.74
-6.07
668.67
Composite

 

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