The second week of April recorded 4.1 days suitable for fieldwork in Missouri, and growers in that state put that time to good use. USDA reports spring tillage 37% complete in Missouri as of this week. Northeast and northcentral portions of the state are still too wet for much fieldwork, but a small window of favorable temperatures and dry weather allowed fertilizer applications to begin across much of the state, starting in the southern third of Missouri, progressing northward as conditions allow. These southern regions already report 5% corn emergence signaling the P&K spread is over in that part of the state.
The numbers in this week's Inputs Monitor Regional Index showed some dramatic increases in P&K over the report week. DAP has been waffling week-to-week, adding a few bucks one week then pulling back the following week -- this week adding $3.23/ton for a regional average of $639.14. MAP has been less volatile, but has followed a similar pattern, adding $4.65/ton this week to $659.08.
Potash has fallen since December, thanks to the Chinese and an oversupplied Canadian potash market. K added an inspired $6.42/ton this week, ending its downtrend with an uptick to $585.30.
But last week Missouri added $44.00/ton to the weekly DAP price, $34.00/ton to potash and $56.00/ton to UAN28% solution. These are some very strong moves to the upside and may signal things to come for the northern Corn Belt.
The national phosphate supply is low, but not dangerously so -- still within the five-year average range. Wholesale ammonia, phosphate rock and sulfur are all trending lower and will continue to support near-term U.S. phosphate production. Potash inventories are still somewhere around 30% above the five-year average, and production continues, uninterrupted.
So with strong inventories, favorable production margins and a slow start to the 2013 planting season, why the pricing increases?
It is 'go-time' -- well, almost -- on the American farm. It is no coincidence that prices have moved higher just as growers mount up and get applications underway. Hand-to-mouth demand excites prices and creates a seller's market, no matter what the product.
Another reason for these price hikes is simple market correction. Current P&K pricing is well below 2012 and 2011 levels, and the spring plant provides an opportunity for the market to correct. Seasonal dips in nutrient prices are easy to see in the technicals, and they are typically followed by a brief spike. Activity in southern regions signals an opportunity to close the seasonal pricing window.
We look for P&K pricing increases to follow crop progress northward. Iron in the field will bring in buyers who have not forward booked or who need to finish filling spring needs. But strong inventories and favorable production margins should limit upside potential to simple demand factors, and as the correction unwinds, the market will turn favorable again when hand-to-mouth purchases are complete.