P&KToday: Phosphate Edges Toward Global Oversupply

November 13, 2015 01:41 PM

 

Phosphate was mixed as potash softened on the week.

  • DAP $37.26 below year-ago pricing -- higher $4.98/st on the week to $540.41/st.
  • MAP $28.43 below year-ago -- lower 15 cents/st this week to $570.69/st.
  • Potash $54.31 below year-ago -- lower 32 cents/st this week to $423.92/st.
  • The average cash corn price figured in to P&K this week is $3.93.
  • The national average corn basis firmed 1 3/4 cents from last week to 31/4 cents above December futures. The national average cash corn price slipped 16 cents from last week to $3.65 1/2. Basis is firmer than the three-year average, which is 2 1/2 cents below futures for this week.
     

11132015PhosphateThe phosphate outlook remains muddy although there have been some improvements in the global fundamentals. Working against phosphate production are phosphoric acid prices which manufacturers report are very volatile currently. Most are booking phosphoric acid on a month-to-month basis as sellers are unwilling to lock in a longer term price point. That has done a lot to support retail finished phosphate prices and discourage U.S. manufacturing on the basis of risk.

Meanwhile, buyers in India and Brazil have cut back on purchases leaving something of a global overhang in phosphate supplies. That will limit the upside and may offer price pressure through the winter. Adding to downside potential is farmer demand which is still in question and assumed to be soft at current price levels. It is true that phosphate prices are still well above the rest of our nutrient segment asking a full dime per bushel cash corn above nitrogen and potash.

Our advice is to hold off on booking phosphate. Prices are likely to fall on global oversupply and perceptions of weak demand. U.S. manufacturing fundamentals will still keep a floor under domestically produced product, but imported phosphate will see price pressure.

11132015PotashRussia's Uralkali, the World's leading potash producer says it will begin cutting sales volume targets for Q4 to try and square supply and demand fundamentals which currently favor the downside. Canadian producers have worked the system well and operational efficiencies continue to improve margins for K manufacturers. Global supplies are still keeping a wet blanket over the market and while we suspect prices are at or near the floor, the upside is very limited.

Potash is still at the bottom of our retail price survey when compared to cash corn prices. If you can find potash priced below $400 per short ton, book for fall or spring applications. How far potash prices will fall from here is uncertain, but if global powerhouse producers like Uralkali are adjusting sales volume guidance for Q4, expect other producers to follow suit in an effort to rebalance global supplies more in favor of sellers.

 

By the Pound --

DAP is priced at 57 cents/lbP2O5; MAP at 54 cents/lbP2O5; Potash is at 35 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 November 6, 2015.

P&K pricing by the pound -- 11/13/2015

DAP $P/lb

MAP $P/lb
Potash $K/lb
 
Average
$0.57
$0.54
$0.35 1/4
Average
Year-ago
$0.60 3/4
$0.57
$0.39 3/4
Year-ago

 

11132015P_KIndex