P&KToday: Phosphate Still Uncertain

December 3, 2015 12:30 PM

 

Phosphate was mixed as potash softened on the week.

  • DAP $34.47 below year-ago pricing -- lower $9.43/st on the week to $538.56/st.
  • MAP $31.20 below year-ago -- higher 82 cents/st this week to $565.42/st.
  • Potash $62.46 below year-ago -- lower $1.67/st this week to $418.25/st.
  • The average cash corn price figured in to P&K this week is $3.89 3/4.
  • The national average corn basis softened 5 cents from last week to 3/4 cents below December futures. The national average cash corn price fell 5 3/4 cents from last week to $3.63 1/4. Basis is firmer than the three-year average, which is 9 1/2 cents below futures for this week.

1232015PhosphateA fairly quiet week in the P&K world. Phosphoric acid prices gave hints of easing, but volatility in acid prices for producers still makes future pricing difficult to pigeonhole. According to data from The Fertilizer Institute, U.S. phosphoric acid production fell 7% in 2014/15 as of June 30 and phosphate imports have skyrocketed to 267% above the seven-year average. Inventories held by phosphate producers down 19% from the prior quarter and down 30% from the high posted in October 2014.

Since inventories are significantly lower than usual and imports are significantly higher, global competition will keep a floor under phosphate prices for the time being. Given the low demand expectations near-term, producers have shuttered plants and are selling phosphate where they can, including the export market.

We expect DAP demand to outstrip MAP demand for two reasons. The first is, of course, price. DAP isn't horribly overpriced although still has some work to do to reflect lower nitrogen prices. MAP is still very pricey by comparison, and as farmers look to trim costs, price shopping will have sway in the decision making process. The second reason DAP will get the nod before MAP is a possible increase in corn acres, and lower soybean acres in spring 2016.

The shift in acres will not be a major one since neither corn nor beans are priced to attract acres in any significant way. We do expect phosphate prices to soften slightly through winter, but since demand is low and imports are high, demand discovery will likely spur prices higher as soon as farmers begin to show up to book vitamin P. That means the smart money will be ahead of the curve. But rather than trying to pick the bottom, the best idea is to know your budget for your 2016 crops, and remain disciplined.

1232015PotashPotash is the opposite of phosphate. Potash is in a state of global oversupply and prices continue to dip lower. We expect that to level-off soon, but at that point, there is little on the production or supply landscape that will immediately spur a rally. Producers around the globe have noted they are taking steps toward battling the supply overhang, but it will take a while before the situation is fully remedied. We must now be complacent here and as I noted above, the best way to manage risk when buying fertilizer is to know what your production budget can handle, and what you can spend without overspending.

Soil nutrition will have to be considered in all of this, and after two consecutive bin busting harvests, soil nutrient profiles will have to be recharged, and P&K are a necessary part of ensuring plant growth and yield potential.

By the Pound --

DAP is priced at 56 3/4 cents/lbP2O5; MAP at 53 1/2 cents/lbP2O5; Potash is at 34 3/4 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 27, 2015.

P&K pricing by the pound -- 12/3/2015

DAP $P/lb

MAP $P/lb
Potash $K/lb
 
Average
$0.56 3/4
$0.53 1/2
$0.34 3/4
Average
Year-ago
$0.60 1/4
$0.56 1/2
$0.40
Year-ago

 

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