Inputs Market Update: Mixed Price Action Suggests Price Floor

November 10, 2015 10:03 AM

11102015NH3

Gains tallied $5.70 to Declines' $3.04 in the regional averages.

We have been watching the downtrend in fertilizer prices for several weeks now and this marks the second consecutive week in which our Nutrient Composite Index firmed. The week-over changes in fertilizer prices have been small in the regional averages and driven by a few states making corrective moves. At this point, those moves have mostly been to the upside. Retail price action is making a pretty good case that the downside is about to run out for fertilizer prices.

Phosphate prices may creep slightly lower once demand for fall applications is satisfied. Wholesale markets have been unable to sustain a meaningful rally. Global demand for phosphate is weak, and winter prices will likely be below today's. Imports of potash have been very strong in recent months and, as with phosphate, demand is weak. Since globally potash is oversupplied and North American demand is still in question, prices have very limited upside potential and will likely run sideways once the low is in place.

11102015PhosphateWe do expect higher nitrogen prices by spring, and this week, anhydrous did continue slightly lower. We have advised to book 50% of your nitrogen for spring delivery at current prices. A few domestic nitrogen production projects are set to come online soon, and that will keep a lid on N prices within a 300 mile radius of those factories. But imports still account for at least half of the nitrogen farmers will apply and that will limit the downside.

Diesel perked up another cent per gallon this week although most states were unchanged. Wisconsin filed a 15 cent increase which drove our regional average higher. Refinery maintenance is still ongoing and as we have said before, once refinery capacity is back up to snuff, prices should soften, especially in the eastern Belt.

Propane is also up a penny this week, but that comes as no surprise. The mercury continues to creep lower and although it has been a warm harvest season overall, demand for home 11102015Dieselheat will support LP prices seasonally. Make sure you are covered on winter propane.

Corn Futures -- December 2016 corn futures closed Friday, November 2 at $4.01 putting expected new-crop revenue (eNCR) at $631.68 per acre -- lower $11.76/acre on the week. With anhydrous priced at $648.43 this week, the eNCR/NH3 spread widened 9.94 points and now stands at 16.75. This means one ton of anhydrous ammonia is priced at a $16.75 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 at $3.72 totals $651.51 per acre.

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Nutrient/Fuel
10/26/15
11/2/15
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$651.07
$650.25
-$1.82
$648.43
Anhydrous
DAP
$534.77
$535.44
$4.98
$540.41
DAP
MAP
$563.57
$570.84
-15 cents
$570.69
MAP
Potash
$425.09
$424.24
-32 cents
$423.92
Potash
UAN28
$295.04
$297.87
22 cents
$298.09
UAN28
UAN32
$324.05
$327.02
48 cents
$327.51
UAN32
Urea
$420.57
$416.14
-75 cents
$415.40
Urea
Farm Diesel
$2.11
$2.11
1 cent
$2.12
Farm Diesel
LP
$1.05
$1.02
1 cent
$1.04
LP
Composite
660.95
662.82
0.59
663.41
Composite

 

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