Inputs Market Update: Fertilizer Softens as States Correct Lower

September 21, 2015 03:56 PM


9212015NH3Gains tallied 4 cents to Declines' $41.71 in the regional averages.

Fertilizer prices fell sharply again this week as led by strong declines in a few states that were due to correct lower. Last week we issued advice to book some of your needs for fall and for spring with the exception of Ohio and Michigan. Michigan anhydrous actually firmed $3.00 per short ton this week, but Ohio NH3 slid $62.00. There may be time yet for Michigan as last week we saw Iowa NH3 firm slightly and then this week, correct lower by double digits. We have long waited for retail prices to catch up with declines in wholesale prices, and these past three weeks have brought us that corrective move.

How much downside is left for fertilizer is unclear, but experts and importers have been preaching steady fertilizer prices for months. If their predictions have been correct, this nod to lower fertilizer prices will be short-lived. For now, reward the setback in NH3 in Ohio by catching up to 80% filled for fall and 30% filled for spring.

MAP is another nutrient that has corrected lower after having been overpriced for a long time. We expect MAP to continue lower for a short time.

9212015DieselWe are waiting the pre-harvest low in fertilizers which has created a clear "V" bottom in recent years past. We will finish booking for fall on a clear indication of a price trend reversal.

Farm diesel fell another 5 cents this week as propane firmed. Expect propane prices to fall near-term as early reports are numerous that corn is coming out of the field very dry, thanks to the hot, dry finish. That will soften demand for harvest propane and pressure prices. If you feel you have overbought on propane, remember, LP in the tank will still be good the next time you need it. That may mean next year's harvest, but we do not expect LP prices to be below this summer's. That being the case, booking a lot of propane you may not need this harvest after all is still a good buy.

Corn Futures -- December 2016 corn futures closed Friday, September 18 at $4.02 putting expected new-crop revenue (eNCR) at $631.74 per acre -- lower $12.00/acre on the week. With anhydrous priced at $660.96 this week, the eNCR/NH3 spread widened 3.55 points and now stands at 29.49. This means one ton of anhydrous ammonia is priced at a $29.49 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 $3.76 totals $642.96 per acre.



Regionally --

Anhydrous fell $8.18 to $660.96; UAN28 fell $6.30 week-over to $307.40; UAN32 fell $4.21 to $347.86; Urea is $6.53 lower at $440.06.

DAP is 17 cents lower on the week at $554.40; MAP fell $9.82 to $575.44; Potash softened $6.45 to $447.84. Farm diesel is a nickel lower this week at $2.04/gallon. LP is 4 cents higher on the week at $1.02/gallon.

Week-over Change
Current Week
-17 cents
Farm Diesel
-5 cents
Farm Diesel
4 cents