Inputs Market Update: Fertilizer Prices Continue Lower

September 8, 2015 03:35 PM

 

Gains tallied $2.06 to Declines' $30.29 in the regional averages.

982015NH3SpreadThe divide between fertilizer prices on the Eastern and Western Belts is extremely wide. The greatest divide in NH3 lies between Kansas at $581.44 and Wisconsin at $756.58. That's a $175.14 gap. Ohio is priced just shy of $750 per short ton while Nebraska is at $610.31. Lower U.S. phosphate production is thought to offer some short-term relief for ammonia prices where supplies are ample, but late season demand in response to N loss strained supplies in some states, and until the supply balance improves, prices are not likely to fall in the East.

Whether or not prices fall in time for fall applications remains unclear and industry experts are sticking with their general forecast for flat fertilizer prices ahead. Wholesale prices have been fairly level according to importers, and that levers for neutral prices near-term. There has been a wide gap between wholesale and retail prices for several weeks, and if retail prices are going to correct lower to better reflect wholesale values, we may see some Eastern prices come under pressure.

Demand for fall applications is projected at about the same level as last fall, but corn prices are giving growers little incentive to overextend on inputs expenditures. Given that we are priced for cash corn at $4.08 1/2 this week and September futures opened today at $3.54, cash on hand and credit availability will likely have more sway in the decision making process than agronomics, and growers may opt to wait on lower prices through the winter, and apply nitrogen before planting in the spring.

So while nitrogen prices are very attractive in the western Belt and parts south, northern and eastern states are still priced as much as $100 per short ton above those price pegs. This coming Friday's reports from USDA are expected to give corn prices a lift, and that may bring some more eastern growers to market for fall nutrient.

982015RubyFarm diesel is flat again this week, unchanged at $2.08. We have written before about the U.S. oil industry's agility, and ability to turn units on and off according to market prices. OPEC will continue producing at their current pace -- which is above even their own production target of 30 million barrels per day. We will continue hand-to-mouth for the time being on diesel.

Propane dipped a penny as supplies are strong and most farmers have already made their bulk purchases at prices well below today's. Don't get complacent here if you have not filled needs for harvest or winter home heat. Late season heat is rushing this corn crop to the finish and that likely will mean wetter than average corn in the hopper.

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 September 2015 futures at Monday's open $3.54 totals $605.34 per acre.

 

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Regionally --

Anhydrous fell $10.39 to $682.11; UAN28 softened 76 cents week-over to $312.97; UAN32 fell $5.96 to $357.57; Urea is $6.21 lower at $448.61.

DAP is 35 cents lower on the week at $557.84; MAP firmed $2.06 to $591.57; Potash softened $6.61 to $458.28. Farm diesel is steady this week at $2.08/gallon. LP is a penny lower on the week at $1.00/gallon.

Nutrient/Fuel
8/24/15
8/31/15
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$702.32
$692.50
-$10.39
$682.11
Anhydrous
DAP
$561.71
$558.19
-35 cents
$557.84
DAP
MAP
$591.35
$589.51
$2.06
$591.57
MAP
Potash
$472.35
$464.89
-$6.61
$458.28
Potash
UAN28
$324.27
$313.73
-76 cents
$312.97
UAN28
UAN32
$367.61
$363.53
-$5.96
$357.57
UAN32
Urea
$463.56
$454.82
-$6.21
$448.61
Urea
Farm Diesel
$2.08
$2.08
Unchanged
$2.08
Farm Diesel
LP
$1.01
$1.01
-1 cent
$1.00
LP
Composite
712.32
704.75
-5.88
698.87
Composite

 

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