Farmers still waiting to learn their final fertilizer bill for 2019 should get ready for a surprise. The news could be good, bad or anything else in a crazy year for a market ruled by wild weather and international turbulence. For those without supplies on hand, how much you pay depends on the vagaries of where you farm and how far you can go for products.
Ammonia on average at retail locations in the Midwest appeared little changed last week, with our price only slightly higher at $579. But averages mean little at crunch time. Wet fields and lack of fall applications will force some farmers to use other nitrogen products. That could drive up prices of alternatives but leave surplus anhydrous in a few locations. Growers in areas far distance from plants concentrated to the south could face sharply higher prices because dealers have yet to book new supplies given all the uncertainty. Some Corn Belt terminals raised prices last week as a result, even as some plants on the southern Plains cut their offers again by nearly $40 a ton. That’s putting them more in line with the international market from Gulf imports and coastal plants, where prices are running around $231 to $240. In normal times, those costs translate into a retail average of just $445 or so. Some producers may be lucky enough to buy at that level if they can haul tons long distance. Otherwise the bill still looks to run well over $600.
Urea is a market where retail and international costs are like two ships passing in the night. Offer sheets from dealers for the most part have yet to reflect the dramatic reduction on wholesale markets seen since fall. Our average retail price did slip a little last week, falling around $3.50 a ton to $381. But some dealers cut prices recently below $350. Now the trend could be headed in the other direction. Floodwaters that closed the Mississippi River north of St. Louis are preventing barges from bringing supplies to the northern Midwest and the system may not reopen in time for spring applications. That squeezed prices in affected areas. International costs have started to creep higher, a move that may gain traction after India was unable to secure everything wanted at its latest tender earlier this month. Swaps at the Gulf don’t show any big jump, however, with June closing Friday at $234, almost $20 lower than the nearby.
UAN could see increased demand if ammonia and urea don’t go down on corn fields. But so far retail costs are actually headed lower. Our average for 28% slipped $3.75 to $264.50, but few dealers are actually doing much with offer sheets yet that still reflect the market months ago when wholesale costs were higher. Retail should be headed lower, based on a wholesale market that still down some down $50 or more from last fall’s highs. Prices at the Gulf for 32% were around $165 last week, with some upriver terminals lowering bids. Swaps into May at the Gulf are down a little, with July/August at $135.
Phosphates also look like they have downside on retail markets, which adjusted lower last week at some locations. Our average for DAP fell $3.50 to $506 but could be much lower based on historical replacement cost patters. Yet the same troubles affecting nitrogen are keeping DAP steady in many locations because supplies can’t reach terminals on closed parts of the river. Costs at the Gulf slipped $4.50 this week to $331.50 in a market like others trying to find bottom.
Potash saw retail prices move higher at some retail locations as dealers restocked inventory at costs that are higher. Our average of $384 is close to projected based on wholesale markets, which were steady to a little lower last week, putting Midwest terminals at $315.
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Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Adviser. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.