P&KToday: Price Pressure & Demand Discovery

October 9, 2015 12:58 PM

 

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

  • DAP $36.32 below year-ago pricing -- higher 56 cents/st on the week to $543.12/st.
  • MAP $37.31 below year-ago -- lower 94 cents/st this week to $569.25/st.
  • Potash $42.79 below year-ago -- lower $2.57/st this week to $436.39/st.
  • The average cash corn price figured in to P&K this week is $3.98.
  • The national average corn basis firmed 1 cent from last week to 19 cents below December futures. The national average cash corn price improved 7 1/4 cents from last week to $3.76. Basis is softer than the three-year average, which is 12 1/2 cents above futures for this week.

Potash prices continue to drift lower and some believe retail prices may fall below $400 per short ton. That would give our regional average a lot of work to do as we remain $36.00 above that mark. Cost cutting on the 1092015PotashP_KTodayinputs side will hit potash demand first, and farmers who are looking to save money on fertilizing for the upcoming crop will likely wait as long as they can before booking in hopes vitamin K prices will fall. This week, however, potash is very fairly valued according to our analysis. Our indexed potash price is below expected new-crop revenue per acre in this week's survey, priced for a $3.64 cash corn bid.

Only one state of the twelve in our reported survey was higher this week. Illinois potash prices firmed 8 cents per short ton while all other states were unchanged to a few bucks lower. That does suggest potash prices are not at all set to increase significantly near-term.

Share prices in PotashCorp and MosaicCo have begun to recover from sharp losses at the end of September in response to lower projected sales volumes. Wisconsin and Michigan are priced the closest to $400 in this week's survey at $406 and $411 respectively. We would be willing buyers at a price at or just below $400 per short ton, but as I said above, that level will be a stretch for some areas of the Corn Belt.

10922015PhosphateP_KTodayOn the phosphate side, the pace of imports will influence U.S. prices. Since U.S. phosphate production has remained at depressed levels, imports from China and the Middle East will account for a hefty share of the phosphate applied for the upcoming crop. DAP ticked higher this week, but most states were basically unchanged. Indiana led gains, adding $7.41 on the week with Kansas up $3.41. MAP was a similar story with most states unchanged and mild declines offsetting mild gains.

If potash is the first place farmers will cut, phosphate is surely a close second, and as demand remains in question, demand discovery will pressure prices to a level growers are comfortable with. If not, farmers will undoubtedly at least trim applications to avoid breaking the production budget. Expect phosphate to explore the downside in the next few months.
 

By the Pound --

DAP is priced at 57 1/4 cents/lbP2O5; MAP at 53 3/4 cents/lbP2O5; Potash is at 36 1/2 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 2, 2015.

P&K pricing by the pound -- 10/9/2015

DAP $P/lb

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

 

1092015P_KIndexes