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NPK Short-Run Outlook

February 1, 2013
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

Nitrogen -- Ammonia prices have fallen slightly, giving the world market a little breathing room. Natural gas platform turnarounds and regularly scheduled maintenance in Trinidad and Tobago had most of the nattie supply from that country diverted to maintaining power generation. Much of the maintenance is complete, and ammonia production is ramping up. Egypt has had natural gas supply issues at two of its ammonia producing facilities, and sendouts have been affected. This has contributed to downstream ammonia pricing at the high end of its range.

Urea was steady to slightly higher week-over at Yuzhnny and in the Middle East. Increases in world markets have largely been due to natural gas disruptions, and as political unrest continues in North Africa, the fear premium could play a larger role in the short-term. This will also affect UAN pricing in the short-run, but the lack of moisture that is making river transport difficult in the U.S. could also cool springtime demand, easing prices.

Currently, per pound, midwest Nitrogen stacks up like this: Anhydrous at 0.43 cents per pound, UAN28 $.18/lb, UAN32 $.20/lb, Urea $.28/lb.

While uncertainty reigns in both weather patterns and on the international stage, springtime demand for Anhydrous is expected to be fairly high in the U.S. and that demand will keep Anhydrous specifically at the top end of the pricing range. But with ammonia pricing presently falling, Anhydrous should follow suit as downstream fill-ups encourage world production.

Trends suggest all forms of Nitrogen steady to slightly higher in the short-term.

Phosphate -- World DAP market prices to continue to soften. Moroccan phosphate rock moves four dollars cheaper to $165.00 week-over -- $32 below year-ago reflecting softening demand in India and South America. Domestic DAP pricing also softens on slow new sales. Production either needs to slow, or global demand needs to increase for pricing to move higher.

South America continues to buy hand-to-mouth and downstream U.S. outlets haven't seen much action but some are starting to restock for spring as forward-booked orders come in. India currently reports adequate supply in storage, so sendouts will be limited, but the pervading attitude, from downstream U.S. suppliers, up the supply chain and across the globe is hand-to-mouth buying based on immediate need.

Given that, look for phosphates to remain steady to slightly lower in the short-term, but a demand bottleneck in the spring could move spot pricing higher. Currently, midwest DAP pricing is headed slightly downward week-over -- trailing around $640.00. MAP moved one dollar higher week-over to $658.00.

Potassium -- Potash pricing is in step with phosphates, and world demand continues to drive pricing. Across the globe, K pricing is largely unchanged week-over, but is dramatically less than the same period last year when granular MOP fetched $556.00 to today's $471.00. Inventories are high in Canada and production curtailments at Uralkali and in Saskatchewan are trying to even the supply/demand balance, but, as with P, an influx of fresh demand is needed before pricing moves off its downward slope.

Midwest potash currently unchanged week-over at $585.00. Trends hint at steady-to-lower pricing ahead for K based on healthy supplies upstream, and continuing production curtailments both in Canada and in Belarus.


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