Inputs Market Update: Phosphate Firms as Diesel Holds Steady

April 18, 2016 04:40 PM

GainsDeclines

Gains tallied $10.54 to Declines' 83 cents in the regional averages.

Nitrogen prices were generally firmer on the week although UAN28% softened 55 cents by the short ton. Anhydrous gains were led by Iowa and Nebraska, each up 11 bucks. Kansas urea firmed nearly 11 dollars by the short ton, and UAN gains were led by Indiana 32% and Kansas 28%. Declines were fairly small, led by a $10.36 decline in Minnesota.

NH3CoverWe expect nitrogen prices to continue higher for the remainder of the spring and into early summer. Prices will fall after demand for sidedress is satisfied, but late summer nitrogen prices are becoming murky as North African producers are said to be slowing UAN output, and China may curtail urea production to rebalance supplies. Bear in mind, by fall 2016, U.S. production will be in an upswing, and that may help limit increases spurred by imported nitrogen.

Phosphate prices firmed this week and we expect to pull the trigger on phosphate in the next day or two. DAP is up a dollar regionally and MAP firmed $4.12. Missouri led gains on both with Missouri DAP up $12.01 and Missouri MAP firmed $18.00. Illinois MAP is up $11.15 this week and Iowa MAP firmed $9.98.

PhosphateI want to take a closer look at the fundamentals in this phosphate market before confirming advice to pull the trigger, but it does appear, due to spring fieldwork, the downside is exhausted in phosphate.

Potash continued lower and we are still comfortable hand-to-mouth on vitamin K for the time being.

Diesel levelled-off at $1.59. Crude oil fell back below $40 per barrel this week on news that Saudi Arabia and other global producers will not cut output, and may not even freeze output at the January level as they had previously said. Diesel may be topping here, but it is early in the spring/summer fieldwork season and demand may keep a hard floor under the market and possibly add mild support. Longer-term we expect diesel prices to fall, but we still maintain unless the crude oil market falls back below $30 per barrel, farm diesel prices bottomed in February.

Corn Futures -- December 2016 corn futures closed Friday, April 15 at $3.88 putting expected new-crop revenue (eNCR) at $610.20 per acre -- higher $21.85/acre on the week. With anhydrous priced at $602.59 this week, the eNCR/NH3 spread widened 19.10 points and now stands at -7.61. This means one acre of expected new-crop corn revenue is priced at a $7.61 premium to one ton of anhydrous ammonia.

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Nutrient/Fuel
4/4/16
4/11/16
Week-over Change
Current Week
Nutrient/Fuel
Anhydrous
$593.40
$599.84
$2.76
$602.59
Anhydrous
DAP
$481.82
$483.98
$1.00
$484.98
DAP
MAP
$495.57
$496.82
$4.12
$500.94
MAP
Potash
$356.60
$357.04
-27 cents
$356.76
Potash
UAN28
$277.10
$279.87
-55 cents
$279.32
UAN28
UAN32
$308.90
$303.90
81 cents
$304.71
UAN32
Urea
$373.36
$373.57
$1.85
$375.42
Urea
Farm Diesel
$1.58
$1.59
Unchanged
$1.59
Farm Diesel
LP
$1.05
$1.07
-1 cent
$1.06
LP
Composite
591.51
592.66
1.73
594.39
Composite

 

NCISpread