Inputs Market Update: Fertilizer Prices Continue Lower | Diesel Firms

September 14, 2015 03:25 PM

 

Gains tallied $4.84 to Declines' $30.09 in the regional averages. Book a portion of spring and fall NPK and diesel, Ohio and Michigan hold off on anhydrous ammonia for now.

9142015NCIThis week fertilizer prices are lower with anhydrous leading the way down. UAN28% and potash led fertilizer increases, and we suspect this week may be the bottom. That being the case, we advise covering another 30% of your fall NPK and 50% of spring NPK. That brings our fall coverage on nitrogen, phosphate and potash up to 80% covered, and our spring coverage up to 50%. Since farm diesel takes its first upward bounce in several weeks, we advise to fill another 30% of harvest diesel to arrive at 60% filled on diesel for harvest. While you are at it, get a quote for spring delivered diesel and if it is at or near the same level as you local price today, book 30% of diesel for spring fieldwork.

Fertilizer prices have been extremely uncertain and a number of my sources urged me to book nutrient during mid-August. We went ahead a week later and booked 50% but did not want to over commit in a climate of such uncertainty. The chart at right shows the annual dip very clearly and while we may slide just a bit farther next week, the downside becomes more limited for fertilizer the longer we go on. Ohio and Michigan are each priced well into the $700's while all others save Kansas are priced in the $600's -- Kansas is at $580 and I'd say go ahead and fill the rest of fall NH3 needs at today's price in Kansas.

9142015NH3Iowa NH3 firmed $3.00 on the week, Illinois firmed $10 and Nebraska NH3 is up $9.00 on the week. We advise growers in Kansas, Iowa, Illinois and Nebraska to consider filling the remainder of anhydrous needs for fall at today's price as an uptick this time of year generally does not retrace until demand dries up post-harvest.

Crude oil futures are stuck in a range in the mid-$40's and harvest demand may firm diesel prices near-term. As an example, note the chart at right. Our spread analysis was begging for diesel to fall, but as crude oil slid well below long time lows, diesel was propped up by harvest demand. We expect farm diesel to find support not as much from higher crude oil, but from demand for harvest. We have been 30% filled for harvest for quite some time now, and we advise pulling the trigger on another 30% ahead of harvest. As I said above, if your local quote for spring delivered diesel is within a few cents of today's price, go ahead and book 30% for spring as well.

9142015RubyPropane fell another 2 cents on the week, but as with diesel, harvest demand threatens to support prices year-on-year. Since LP supplies are extremely high, price spikes do not appear to be a threat presently, but the off-season LP price low will come before harvest and before the first frost. If you have not filled propane for harvest and winter heat, get current to 100% filled on this week's dip.

Corn Futures -- December 2016 corn futures closed Friday, September 4 at $3.88 putting expected new-crop revenue (eNCR) at $612.74 per acre -- lower $18.57/acre on the week. With anhydrous priced at $682.11 this week, the eNCR/NH3 spread widened 8.18 points and now stands at 69.37. This means one ton of anhydrous ammonia is priced at a $69.37 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 $3.87 totals $661.77 per acre.

 

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Regionally --

Anhydrous fell $12.97 to $669.14; UAN28 firmed 73 cents week-over to $313.70; UAN32 fell $5.50 to $352.07; Urea is $2.02 lower at $446.59.

DAP is $3.27 lower on the week at $554.57; MAP fell $6.31 to $585.26; Potash firmed $4.10 to $462.38. Farm diesel is a penny higher this week at $2.09/gallon. LP is 2 cents lower on the week at $0.98/gallon.

Nutrient/Fuel
8/31/15
9/8/15
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$692.50
$682.11
-$12.97
$669.14
Anhydrous
DAP
$558.19
$557.84
-$3.27
$554.57
DAP
MAP
$589.51
$591.57
-$6.31
$585.26
MAP
Potash
$464.89
$458.28
$4.10
$462.38
Potash
UAN28
$313.73
$312.97
73 cents
$313.70
UAN28
UAN32
$363.53
$357.57
-$5.50
$352.07
UAN32
Urea
$454.82
$448.61
-$2.02
$446.59
Urea
Farm Diesel
$2.08
$2.08
1 cent
$2.09
Farm Diesel
LP
$1.01
$1.00
-2 cents
$0.98
LP
Composite
704.75
698.87
-4.52
694.35
Composite

 

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