Phosphate and Potash Diverge on Supply and Demand

September 17, 2015 01:06 PM

 

Phosphates softened as potash retraced a portion of last week's price slide.

  • DAP $35.44 below year-ago pricing -- lower $3.27/st on the week to $554.57/st.
  • MAP $19.39 below year-ago -- lower $6.31/st this week to $558.26/st.
  • Potash $16.21 below year-ago -- higher $4.10/st this week to $462.38/st.
  • The average cash corn price figured in to P&K this week is $4.07.
  • The national average corn basis softened 3 1/2 cents from last week to 18 1/4 cents below December futures. The national average cash corn price firmed 13 1/2 cents from last week to $3.67 1/4. Basis is much softer than the three-year average, which is 10 cents above futures for this week.

The United States is quickly becoming something of a premium market for phosphate exporters. Globally, markets in Europe, South America and Asia are in a seasonal period of weak demand. If North American wholesalers can take advantage of soft global demand for phosphate, import volumes may be obtainable at prices that will appear attractive to farmers. But low crop prices continue to sour attitudes about inputs purchases on the farm. Potash's prospects are much brighter. Inventories at wholesalers are strong and availability is high. Along with that, potash prices are low and have been at the bottom of our survey for several months. That may pull more phosphate dollars into potash and soften U.S. demand for DAP and MAP.

Inputs prices for phosphate manufacture have eased, but domestic production is not enough to supply the U.S. market. That puts China and the FSU squarely in charge of setting phosphate price points and since supplies are poorly distributed and spotty at best, prices will face little pressure near-term. We have advised to book up to 80% of fall phosphate or 30% of spring phosphate. The same percentages apply to potash. The winter months are uncertain and our outlook calls for prices to run sideways with a higher bias on phosphate and a lower bias on potash.

Corn prices will have to do their part as well in order to make all fertilizers more affordable according to expected new-crop revenue. Over the past few weeks, the revenue gap between fertilizer and corn has narrowed, but these are very volatile and uncertain markets, and we have seen strength in expected new-crop revenue fall sharply and unexpectedly. Price protection will be key for some growers whose budgets are under stress. That will mostly depend on land rents and those who own more acres than they rent will likely be among those who are able to purchase a full compliment of nutrient for the upcoming crop.

 


By the Pound --

DAP is priced at 58 3/4 cents/lbP2O5, 1/4 cent lower on the week; MAP at 55 1/2 cents/lbP2O5, down 1/2 cent; Potash is at 38 1/4 cents/lbK2O.

The following is an updated table of P&K pricing by the pound as reported to your Inputs Monitor for the week ended September 4, 2015.

P&K pricing by the pound -- 9/17/2015

DAP $P/lb

MAP $P/lb
Potash $K/lb
 
Average
$0.58 1/2
$0.55 1/2
$0.38 1/4
Average
Year-ago
$0.62
$0.57 1/2
$0.39 3/4
Year-ago

 

Phosphate -- Phosphates were lower on the week with DAP falling $3.27 regionally and MAP falling $6.31 per short ton. Altogether, DAP is priced at a regional average of $554.57 and MAP is currently priced at $585.26 per short ton. Nebraska and Michigan led DAP declines this week as Iowa, Illinois and Wisconsin firmed. Minnesota, Kansas, Illinois and Missouri led MAP lower with Indiana posting a $3.00 gain -- our only upward mover in MAP.

Potash -- Potash was $4.10 higher on the week to an average of $462.38. Minnesota and Missouri led declines as Illinois and Wisconsin potash firmed double digits.