Inputs Monitor Regional Index: Scattered Declines Force Nutrient Lower

October 28, 2013 05:44 AM
 

Declines tallied $87.37 3/4 to gains' $3.88. UAN28% was the only regional average price that moved higher, and although prices for other nutrient fell hard, those declines were led by huge falloffs in just a few states. Most states were unchanged to slightly lower.

Corn Futures --

As we look to book nutrient for the coming year, our focus shifts from the December 13 corn futures contract to the Dec 14. Today, the Dec14 corn futures contract opened at $4.82. Based on that, expected new-crop revenue lies at $728.00/acre at 160 bu.

The ZCZ/NH3 spread currently lies at -52.53 with Dec14 futures on top. We have talked about fertilizer demand waiting out declines, and suppliers trying to price material at a level that will attract buyers without breaking the bank. Word is that some locations are forced to write-down existing inventory to make it move. The result has been a standoff between buyers and sellers all up and down the supply chain.

The pricing moves we see this week are very strong in some states, but the influence over those moves on the numbers is a little deceiving. As an example, Urea fell $43/ton in Indiana this week, but firmed $31/ton in Iowa. Same deal across the board with most states up or down a few bucks, but along the way, some strong localized declines hold sway over the regional average. We will take a very close look at these in this week's N Files on Tuesday.

Of Note --

Front month WTI crude oil snuck below $100.00/barrel last week and the declines continue into this week. Meanwhile, natural gas isn't sure what do do with itself. We expect natural gas futures to move higher as WTI crude declines, but a strong national supply and low demand thus far for home heat has limited the upside response from natgas.

Today, November 13 natural gas opened at $3.678 and has already shed 11 cents on the day.

We issued an alert to LP users last week, especially in parts of the Corn Belt north of St. Louis to contact your LP supplier immediately. Delivery bottlenecks in Minnesota, Iowa and the Dakotas forced state legislators to issue 'Hours of Service Waivers' to allow LP delivery drivers to work longer hours in a day in those states.

Wisconsin is currently under a waiver effective late Friday, and Illinois picked one up just this morning. If you are short on LP, call your preferred supplier today. Trucks from outlying areas have been called in to help satisfy demand, and that may just chase the problem around the Midwest.

-----------------------------

Regionally --

Anhydrous softens $37.49 to $675.47; UAN28 firms $3.88 week-over to $326.62; UAN32 falls $21.35 to $340.23; Urea $2.12 lower to $462.22.

DAP $7.36 lower to $526.73; MAP $11.68 lower to $556.70. Potash falls $7.34 to $486.15.

Farm diesel down 1 3/4 cents to $3.449 -- 33 1/4 cents below year-ago. LP softened 2 cents to $1.575 -- 13 3/4 cents above year-ago.

Nutrient/Fuel
10/14/13
10/21/13
Week-over Change
Current Week
Year-Ago
Anhydrous
$703.94
$712.96
-$37.49
$675.47
$859.67
DAP
$546.76
$534.09
-$7.36
$526.73
$650.17
MAP
$567.21
$568.38
-$11.68
$556.70
$664.42
Potash
$491.29
$493.49
-$7.34
$486.15
$603.25
UAN28
$317.76
$322.74
+$3.88
$326.62
$380.08
UAN32
$357.00
$361.58
-$21.35
$340.23
$441.55
Urea
$457.21
$464.34
-$2.12
$462.22
$588.75
Farm Diesel
$3.495
$3.465
-$0.01 3/4
$3.449
$3.781
LP
$1.542
$1.595
-$0.02
$1.575
$1.437
Composite
382.91
384.742
-9.278
375.462
465.90

 

Last year's pricing was well above today's peg with NH3 now $184.20 below year-ago; DAP $123.44 below; MAP $107.72 below year ago; Potash $117.10 below; UAN28% $53.46 below year-ago; UAN32% $101.32 below and urea currently $126.53 below the same time last year.

Anhydrous Action --

Eight of our twelve states surveyed moved lower on anhydrous during the report week with Wisconsin and Ohio unchanged. The biggest moves were in Indiana and North Dakota, but NH3 gives growers something to smile about in South Dakota, Nebraska and Missouri. All other moves were small with Kansas and Minnesota slightly higher.

State NH3
Previous Week
Change
Current Week
Iowa
$657.99
-$3.92
$654.07
Illinois
$695.96
-$6.02
$689.94
Indiana
$759.68
-$49.89
$709.79
Wisconsin
$695.95
unchanged
$695.95
Minnesota
$655.34
+$2.59
$657.93
South Dakota
$708.66
-$16.90
$691.76
North Dakota
$730.75
-$66.97
$663.78
Nebraska
$634.15
-$23.92
$610.23
Missouri
$654.46
-$10.13
$644.33
Kansas
$608.61
+$0.42
$609.03
Ohio
$915.00
unchanged
$915.00
Michigan
$838.99
-$15.10
$823.89

 

Near Term Outlook --

December corn will continue to drive fertilizer pricing. Demand influences have the upper hand right now as growers in select states enjoy what appear to be corrective moves toward the national average price. But as we look to corn futures, the Dec14 contract has it that nutrient is dramatically underpriced. If nutrient looks to capture the difference, the potential for a hard upside swing increases with each day.

The stopgap is time. As long as growers have another few days to hold out on booking fall nutrient, all indications are that they will wait. This could force prices lower, but according to both DEC corn and producer margins, the downside has already been way overdone.


 

 

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