Market and product
Fertilizer Market Quiet After Ammonia Spike
Ammonia was flat to even a little lower on wholesale markets last week, following the big jump higher on supply chain issues. Curtailed shipment s out of the Black Sea were exacerbated by disruptions on a pipeline flowing from Texas/Oklahoma to Minnesota. Wholesale prices in the western Plains eased $5 last week after completing a swift $100 hike, with terminals now running around $640 to $645. Producers typically can add $50 to $100 onto those charges. USDA put the average cost in Iowa last week at $706, in a range from $640 to $772, while costs on the Plains at the end of August ran $660 to $750, with some dealers still adjusting offers higher.
Urea is again pulling back from summer highs on international markets, after a counterseasonal rally at a time when prices are usually sluggish. Nervousness about the Black Sea situation may have front-loaded some buying, but prices don’t look like they have a lot of downside unless farmers keep their wallets closed this fall. Costs on the Plains are running $475 to $520, with Iowa stuck at $540 according to the USDA survey. The index at the Gulf dropped $7 to $351.50, which translates into a fair retail value of around $473. The swaps curve shows costs down around $14 by winter, with October just $4 less than the nearby.
UAN bucked the trend and moved $5 higher on the Gulf index, which is at $247.50 for 32%. Still, the swaps curve shows flat prices through the winter, while the retail market was also quiet, with fair value for 28% at $320, according to our model. Costs on the Plains are running $325 to$360, while USDA put the average in Iowa still at $350 for 28%
Phosphates eased a few dollars for the second straight week, after a quiet summer, at least domestically. International prices got a bump from strong buying from Brazil, and big importer India could begin stepping up its purchases finally after the arrival of monsoon rains. Costs at the Gulf of $440 for DAP translate into fair value of around $545 at the retail level, while charges on the Plains are running $550 to $590, with a few higher. Swaps are pretty much flat into winter, though there’s considerable upside risk into spring from a supply chain dominated by Middle Eastern producers, though sales from China could ease any rally.
Potash prices have flattened out after a successful attempt by manufacturers to move themarket off depressed winter lows. The relative bargains stemming from the breakup of the Belarussian cartel stimulated active buying from farmers around the world at the same time
Canadian companies cut back production, tightening inventories. Prices don’t look like they have a lot of upside, but downside may be limited too. Look for the market to be dull until China begins buying again in January. Current Midwest terminal prices of $405 translate into fair value
of $492, but most dealers are below that, having locked in costs earlier. Retailers on the Plains are charging $475 to $480 mostly, while USDA put Iowa at $467.50.
Source:http://farmfutures.com/
