P&KToday: Production, Inventories to Limit Phosphate Strength

May 27, 2016 11:51 AM

P&K were generally higher on the week.

  • DAP $80.83 below year-ago pricing -- higher 82 cents/st on the week to $486.50/st.
  • MAP $97.08 below year-ago -- lower 21 cents/st this week to $500.13/st.
  • Potash $132.45 below year-ago -- higher 11 cents/st this week to $353.76/st.
  • The average cash corn price figured in to P&K this week is $3.45 per bushel.

PhosphateThe national average corn basis is unchanged from last week at 7 cents below July futures. The national average cash corn price firmed 10 1/4 cents from last week to $3.98. Basis is softer than the three-year average, which is 21 cents above futures for this week.

Russian phosphate producer PhosAgro reported this week they forecast output to surge 7-10 percent on the strength of strong Q1 earnings. Weakness in the Russian ruble and an 8 percent rise in sales volumes supported net profits $303 million (U.S.) above year-ago in the first quarter. While increased Russian phosphate production will support higher global stocks, much of the tons produced will service markets including India, Pakistan, Brazil and Argentina. As North American producers continue to allow foreign producers shoulder the bulk of production risk, increases in global supplies will likely lead to softer U.S. landed values.

potashMeanwhile, North American phosphate and potash producer MosaicCo. reports very low exports but very high domestic disappearance. North American inventories as of the end of March were in line with expectations and production ticked higher, rising into the the seven-year average range for the first time in nearly a year. Since North American phosphate exports fell against a sharp increase in domestic disappearance, increased Russian supplies may not have much impact on domestic prices. But production increases and brisk U.S. demand should encourage price softness, especially since domestic stocks are ample.

North American potash production was in line with the five-year average pace as of May 2016 as were ending inventories. Domestic sales were just above the five-year average pace and exports were slightly higher. That is fairly decent business in a time when P&K demand was expected to suffer. Potash prices may begin to creep higher near-term, but U.S. demand for vitamin K is set to fall seasonally. That will likely limit the upside although we believe the downside has been exhausted. Where prices go through summer will depend on which production units are utilized by producers -- high cost or low cost units. Russian producers are expected to continue to take advantage of ruble weakness against the dollar which may swell global stocks through summer. We must also remember Chinese importers have not yet set their contract price. That number will give us a better idea of what to expect for fall prices.

By the Pound --

The following is an updated table of P&K pricing by the pound as reported to your Inputs Monitor for the week ended May 20, 2016.

DAP is priced at 50 1/2 cents/lbP2O5; MAP at 47 cents/lbP2O5; Potash is at 29 1/4 cents/lbK2O.

P&K pricing by the pound -- 5/26/2016

DAP $P/lb

MAP $P/lb
Potash $K/lb
$0.50 1/2
$0.29 1/4
$0.59 3/4
$0.56 3/4
$0.40 1/2