P&KToday: P&K Producers Playing Prevent Defense

November 19, 2015 10:49 AM

 

Phosphate was mixed as potash softened on the week.

  • DAP $41.00 below year-ago pricing -- lower $1.89/st on the week to $538.52/st.
  • MAP $28.40 below year-ago -- higher 99 cents/st this week to $571.68/st.
  • Potash $56.69 below year-ago -- lower $2.08/st this week to $421.83/st.
  • The average cash corn price figured in to P&K this week is $3.92.
  • The national average corn basis firmed 3 3/4 cents from last week to 7 cents above December futures. The national average cash corn price firmed 3 1/2 cents from last week to $3.69. Basis is firmer than the three-year average, which is 3 cents below futures for this week.
     

11192015PhosphateWe have already seen North American phosphate producers make efforts at improving operational efficiencies and cut production as profit potential has fallen. That has brought a greater proportion of imported product into the United States. Since global demand is no more certain or robust than is domestic demand, exporters have offered phosphate at a lower price than have domestic producers. Between increased operational efficiencies, increased imports and the threat of curtailed farmer applications, phosphate prices will have to fall to fire up buyer interest.

The same thinking is now showing up on the potash side. Global supplies are more than ample to answer demand. Russia's Uralkali recently reported it will curtail potash production, apparently abandoning its volume-over-price strategy. Uralkali is not alone in looking to limit losses related to potash production. Some producers will refocus their production on SOP (sulfate of potash) rather than the more traditional MOP (muriate of potash) to sell to fruit and vegetable growers.

11192015PotashPotashCorp is looking to diversify their offerings and are reportedly considering focusing at least partially on non-fertilizer product mining. MosaicCo notes it will attempt to encourage micro-nutrient sales. Israel Chemicals Ltd, a leading potash producer, has said it will accelerate production of polyhalite, even as it continues to produce potash.

P&K demand has been low in the U.S. due to low crop returns. Currency weakness in the Brazilian real and the Indian rupee have impacted sales to those nations. That has left global supplies overhanging and prices subject to pressure. Since potash has already fallen sharply, phosphate has the greater amount of downside professional of the two. We expect potash to level off just below current levels and for phosphate to continue to gradually creep lower through early winter.

As P&K producers circle the wagons and contrive strategies to maintain profitability that look an awful lot like prevent defense, farmers in the U.S. should expect softer phosphate prices before spring and at least sideways potash price action during the same period.

 

By the Pound --

DAP is priced at 56 3/4 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 13, 2015.

P&K pricing by the pound -- 11/19/2015

DAP $P/lb

MAP $P/lb
Potash $K/lb
 
Average
$0.56 3/4
$0.54
$0.35 1/4
Average
Year-ago
$0.60 3/4
$0.57
$0.39 3/4
Year-ago

 

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