Ammonia Declines May Offer Phosphates Downside Action

March 25, 2013 11:01 AM

The price of ammonia delivered through Tampa has fallen to just below $600.00/ton for April. That is a savings of $28.00/ton compared to March which settled at $625.00/ton.

Much of the ammonia that enters through Tampa, Florida is utilized in the production of phosphates in Florida and North Carolina and distributed domestically. The lower ammonia price -- now at $597/ton for April -- may help lower the price of DAP/MAP during the summer. The cheaper feedstock may also stretch margins wide enough to convince P producers like CF, Mosaic and PotashCorp to increase production and add to the North American supply which currently rests about 9% above the bottom of the five-year average.

A ten year average of DAP pricing in Minnesota lends an average of $453.40/ton. That compares to today's DAP price in Minnesota of $613/ton which is well above that average suggesting prices may offer some downside action as this less expensive product makes its way through the production chain to the end user.

Short-run expectations are for phosphates to range where they are through the spring -- currently Inputs Monitor Regional DAP at $641.41/ton; MAP at $655.50/ton. But a wave of discounted ammonia from Trinidad and Tobago could help move prices lower late in the summer, particularly if production trends increase the amount of inventory on-hand upstream.

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