Last week we noted foreign interest in buying urea out of the U.S., an indication prices here were cheap. That opinion may be reaching a consensus based on sellers’ response to a new tender from India due by the end of the month.
Ammonia costs stayed fairly firm this spring on international markets despite the downturn in urea. Now it appears to be ammonia’s turn. A big break in prices out of the Black Sea could lead force costs for June contracts at the Gulf lower, with retail prices also down this week. While not a lot of dealers are resetting prices, those that did are down, dropping the average to around $492.75. Retailers on the Plains shaved as much as $60 off offers with most of the recent changes in the $430 to $480 range. Fair value based on the Gulf contract for May is $507, but that seems likely to drop next month. International prices suggest U.S. costs under $480, a notion supported by fundamentals unless crop prices rally this summer.
Urea turned higher last week, recovering from a slide to one-year lows at the Gulf. While the increase at the Gulf was minimal, the market in the Middle East rose $10, as news broke of another big tender from Egypt. Lack of Chinese selling is leading to expectations that prices are stabilizing, if not moving higher after their big break. Swaps into fall are steady to slightly higher, making our current retail average of $317 seem fairly priced. The average edged $1.25 higher last week, with the market on the Plains now $290 to $300 on recently adjusted offer sheets. Increased production at U.S. plants this summer may keep prices from moving sharply higher unless manufacturers can move it abroad.
UAN broke again on the wholesale market, though retail prices were flat with some side-dressing demand still around. That won’t last long, and prices should fall sharply at the retail level this summer. The price for 32% at the Gulf was off $7 last week to settle Friday at $159, and swaps for August are all the way down to $125. Our current average price for 28% is 231, which could fall towards $200.
Phosphates appear to be stabilizing as companies put a positive spin on the latest industry data. North American inventories fell to the lowest level since June 2015. Imports more than offset lower production, but demand was stronger too. While there’s plenty of production coming on line out of the Mediterranean, environmental regulations may force Chinese firms to cut back. Costs for DAP at the Gulf were up $1.50 last week to $305, suggesting the current retail average of $427 is fairly priced.
Potash was steady last week, with the current retail average of $324. That’s around $18 higher than projected fair value based on wholesale supplies, because some dealers have not reset prices recently. Supplies continue to try to stabilize. North American inventories were up last month, but below the prior year, as lower production and stronger domestic demand offset weaker exports.
- Farm Futures -