U.S. fertilizer markets were mostly quiet last week at the retail level, but international traders are waiting to see if a big drop in urea reverberates through the complex. Costs at the farmgate level appear to have little if any upside into summer, which could spur retailers to deal on leftover supplies.
Ammonia costs were steady last week despite the turmoil in other segments of the nitrogen industry. Costs should head lower into summer if the international supply chain holds up, as more production comes on line in the U.S. Not all that output will be available to farmers directly, however; some will be used to make other products, including urea. Average retail costs were steady last week around $507.50 a ton, a little cheaper than the projected fair value cost based on current swaps at the Gulf.
Urea is often the first fertilizer product to make a move, and this spring the next leg down is lower. Costs at the Gulf dropped $17 to fall just below $180, in a world market with a lot of sellers and fewer buyers right now. Results from the recent tenders by India continue to shake things up. A lot of offers were left on the table, with China exporting again just as new facilities in the U.S. begin to ramp up their output. Sellers out of the Middle East are also looking for a home, adding to supply. Still, swaps for summer don’t show huge discounts to the nearbys yet. July fair value is around $320, less than $10 below our current average retail cost of $328. Farm level costs fell $5 last week, with recently updated offer sheets on the southwest Plains a little under $300.
UAN prices softened a little at the retail level on average last week, though planting delays could boost in-season nitrogen applications. Our average retail cost for 28% ss at $233.50, about $20 below the current projection of fair value based on wholesale costs of $172 for 32% at the Gulf. That strong bid was up $3 last week but strength may not last long. Swaps into October are down around $30 to $140 for those who can wait to buy.
Phosphates showed a little strength at the Gulf last week, bucking a softer tone on global markets. China is selling DAP too, adding to ample supplies available from North African into the Middle East. The retail price of DAP was flat at $424. That was below replacement cost based on current expenses out of the Gulf, which were up $7 last week to $315. Swaps show lower costs into August that could keep retail prices mostly flat.
Potash prices remain firm. The Corn Belt terminal price was steady last week at $257 while a few dealers raised offers, taking our average retail price above $321. That price seems about $10 too high based on the wholesale market, but some dealers’ supply likely is tight as retailers avoid restocking in an uncertain market. China could be back to the buying table in May, with its ability to jawbone prices setting the tone into summer. - farmfutures.com -