P/KToday: P&K Prices Tumble on Soft Demand & K Supply Glut

October 15, 2015 12:55 PM

 

Potash and MAP softened on the week as DAP firmed slightly.

  • DAP $43.27 below year-ago pricing -- lower $7.90/st on the week to $535.23/st.
  • MAP $34.98 below year-ago -- lower $1.48/st this week to $567.77/st.
  • Potash $48.72 below year-ago -- lower $5.16/st this week to $431.24/st.
  • The average cash corn price figured in to P&K this week is $3.94.
  • The national average corn basis firmed 3 1/4 cents from last week to 16 1/4 cents below December futures. The national average cash corn price softened 13 3/4 cents from last week to $3.62 1/4. Basis is in line with the three-year average, which is 15 cents below futures for this week.

10152015PhosphateGlobal phosphate demand is currently reported to be very low although some sales have been made to South America in recent weeks. Here at home, wholesale prices were slightly firmer on the week although retailers have noted tepid sales of any fertilizer. As harvest goes on, demand for phosphate will pick up, but just how much is in question. More imports are on their way and the increased supply should keep a lid on retail prices for the time being.

MAP continues to prop-up phosphate prices and is currently priced 5.6% above our indexed DAP figure. Interesting to note that DAP fell nearly 8 bucks per short ton this week as MAP fell just $1.50. We have seen instances before where DAP and MAP trade weeks -- one declining by a wide margin one week as the other holds steady and flipping that price action in the following week. Time does appear to be running out for early harvest fertilizer price softness although most forecasts expect upside risk to remain muted for a few weeks. That could give MAP an opportunity to play a little catch up if DAP holds steady.

10152015PotashPotash prices fell this week as global and U.S. demand remains very weak in the face of hefty global stocks. This week, potash is priced below expected new-crop revenue. It is nice to see that fertilizer -- even if it is vitamin K -- can press below expected new-crop returns. Potash has been at the very bottom of our price comparison to corn for a good long while now, and we expect that to continue to be the case based on softer fundamentals. Producers are still skittish about overproducing and prices will respond higher once the supply glut is remedied. But as with phosphate, potash demand for the upcoming crop is also in question.

Obviously, the longer this current downtrend lasts the better it will be for production budgets. But even when priced below one acre of expected new-crop revenue, potash is having a hard time finding buyers. We expect P&K to work sideways near-term with MAP showing the least amount of sign it will fall. Once buyers come to market, retailers will have a tough choice. Demand discovery says that once buyers show up, the seller can be relatively certain he has hit a price point that growers view as "low enough". But as crop prices have fallen, the different factors impacting inputs decisions are numerous. Those factors include the mix of rented to owned farmground a producer is farming, savings on hand, local basis and land rental rates just to name a few. That wide variety of financial circumstances will contribute to the difficulty with which retailers negotiate demand discovery and place P&K price points.

If you are planning on applying fall P&K, stay hand-to-mouth for the time being as we believe prices will edge lower near-term.

By the Pound --

DAP is priced at 56 1/2 cents/lbP2O5; MAP at 53 3/4 cents/lbP2O5; Potash is at 36 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 October 9, 2015.

P&K pricing by the pound -- 10/15/2015

DAP $P/lb

MAP $P/lb
Potash $K/lb
 
Average
$0.56 1/2
$0.53 3/4
$0.36 1/4
Average
Year-ago
$0.60 3/4
$0.57 1/4
$0.39 3/4
Year-ago

 

10152015P_KIndexes