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February 2013 Archive for Inputs Insights

RSS By: Davis Michaelsen, Pro Farmer

Inputs Monitor Editor Davis Michaelsen adds his perspective into the happenings of the inputs markets.

Inputs Monitor February Wrap-up -- Nutrients

Feb 28, 2013

Your Inputs Monitor observed a run to the upside for nutrient in February. Gainers added $34.07 to decliners' $5.50 and March first is likely to prove to be the close of the seasonal buying window before the spring application.The biggest gainers were UAN solutions which added $7.25 for 28% and a whopping $14.96 for 32%. After trailing since October, Farm Diesel and LP both found an upward draft and potash and MAP were the only two nutrients that fell over the month.

With December 2013 corn futures currently at $5.54, total NPK should account for around 18% of expected new-crop revenue. Given current Dec. '13 pricing, 160 bu/acre (trendline) yield would produce $846.40 per acre in new-crop corn revenue. At that level, pricing resistance for total NPK lies at $152.35 per acre.

Anhydrous added $4.50 during the month of February to end at $882.08; Urea adds $2.50 to $565.33; UAN28 up $7.25 to $382.00 and UAN32 up $14.96 to $430.33.

DAP moved $4.67 higher to $644.33 while MAP fell $4.58 to $654.00.

Potash was largely stable through the month and wound up falling $0.92 during the month to $584.16.

Farm Diesel added $0.133 to $3.56 and LP gained $0.065 to $1.496.

*The table below compares pricing for nutrient and fuels during the first and last weeks of February.

February Pricing
2/4/2013
2/28/2013
Month-over change
Anhydrous
$877.58
$882.08
+$4.50
DAP
$639.66
$644.33
+$4.67
MAP
$658.58
$654.00
-$4.58
Potash
$585.08
$584.16
-$0.92
UAN28
$374.75
$382.00
+$7.25
UAN32
$415.37
$430.33
+$14.96
Urea
$562.83
$565.33
+$2.50
Farm Diesel
$3.427
$3.560
+$0.133
LP
$1.431
$1.496
+$0.065
Composite
457.637
460.811
+3.174

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NPK Outlook...

The short-term outlook for NPK is improving in some key areas and as planted acres to corn are expected to increase, reports from upstream are that nitrogen is in good supply. Hand-to-mouth buying early in March may temporarily inflate pricing at retail outlets, but prices are expected to remain largely stable into early summer and production will be supported by favorable expected new-crop revenue.

Phosphates in particular have made gains against five-year inventory levels after lagging for most of 2012. High ammonia costs due to scheduled maintenance in Trinidad and Tobago and natural gas disruptions in North Africa have shown signs of easing and this should translate into increased DAP/MAP production, further lowering the price of P this summer.

North American Potash inventories are still quite high both year-over and against the five-year average. Some have raised the suggestion that China delayed K purchases from Canpotex in fall 2012 to inflate Canadian inventories, lowering the purchase price. When China did make a purchase, it was for a deep discount and only for 1 million tons. This is working in favor of North American growers as 2013 shows favorable pricing for banking a little K in the soil.


 

 

 

 

January Wrap-up -- Inputs Prices

Feb 07, 2013

By the time all was said and done in January, all nutrient pricing had fallen. Farm diesel and LP both had spent the few weeks prior to the first of the year in decline along with the Inputs Monitor Composite. But the transition from January to February was not kind to regional inputs prices. Only two of ten prices fell that week -- DAP and K -- while everything else, from Ruby Red and NH3 to the Monitor Index Composite rallied.

A previous Inputs Monitor analysis from this week had this to say, "While I am hesitant to call this a 'buy window' -- because prices are still high -- trends suggest that nutrient may have found its low. Tight ammonia supplies, river transport difficulties, escalating projected corn revenue, high expected springtime N demand and South American weather uncertainty have all converged to drive nutrient pricing higher. These gains are not likely to fade this close to the spring application season." (click here for the full 'Nutrient Pricing Takes a Bounce' analysis)

N&P prices remain high on stressed natural gas supply from North Africa -- notably Egypt. But with Trinidad and Tobago approaching normal ammonia production levels after seasonal maintenance and turnarounds, ammonia stocks may loosen in the coming weeks, possibly softening feedstocks for Anhydrous and UAN and Phosphates.

The Month-over numbers look like this...

Anhydrous $2.51 lower month-over to $879.16; UAN28 adds $1.92 to $377.25; UAN32 jumps $4.71 to $422.38 and Urea trails after a choppy up-and-down month to finish $1.08 lower at $563.75.

DAP sheds $7.59 month over after three weeks of solid declines to $638.83; MAP $3.42 higher to $660.50.

Potash found $4.75 in the downside -- lower month-over at $584.42.

Farm Diesel had been trending lower since the end of October and found its first rally during the last week of January dropping $0.067 all told to $3.432 -- but a rally late in the last week of January pressed week-over prices $0.011 higher.

LP followed Farm Diesel to the low for much of the same period and, like Ruby Red, found an upward draft in the last week of January. LP eliminated the entire month's losses by rallying $0.001 -- just enough to post a .06% gain to enter February at 1.442.

A little bit more math on January's numbers demonstrates why I feel it may be time to book a portion of spring Nitrogen now.

Week-to-week the Inputs Monitor Weekly Index Composite fell until the last week of January when it added $1.38. When individual gains vs declines are added up, the entire month has gainers adding $10.05 and decliners shedding $15.99. The week prior -- week ended January 28-- gainers added just $1.50 while declines tallied $19.88 in savings.

In other words, nutrient pricing took a bounce during the last week of January that suggests the seasonal low may have exhausted its room to the downside. Again, this close to spring application, prices are not likely to give much based on increased expected planted corn acres and anticipation of high springtime N demand.


 

 

January in Review -- The News

Feb 01, 2013

Expect a full wrap-up of nutrient pricing from your Inputs Monitor Regional report on Monday. In the news, January was a good month internationally for Potash while U.S. Phosphate production outpaced demand.

Meanwhile, as news comes in suggesting the Mississippi River may not be in as bad shape as predicted earlier, an unexpected hiccup has river traffic at a standstill. Click on the links below for the stories.

China Inks Deal for Canadian K -- At Last

China had postponed a seasonal purchase in the fall of 2012, but struck a deal at a price point setting discount. The size of the order suggests Chinese buyers see more room to the downside for Canadian K.

India Seeks K at the Source

India makes two moves. One finds them owning a 20% stake and the other, an 8% discount below market value for twenty years.

U.S. Phosphate Production on the Rise

U.S. DAP/MAP inventories are still 4% below year-ago levels, but a decline in U.S. Phosphate exports coupled with a 6% increase in production have placed supplies just 3% below five-year levels.

Incorporated Manure a Good Source of P

The University of Minnesota Extension provides insight on efficiently utilizing manure to enrich your nutrient profile.

Oil Spill on the Mississippi

A barge allided with the Vicksburg Railroad bridge, spilling light crude into the Mississippi River. The cleanup has traffic halted.


 

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