Inputs Monitor Regional Index: Dec. Corn Pressures Nutrient Slightly Lower

October 14, 2013 04:49 AM
 

DSC 0016Declines tallied $14.69 3/4 to gains' $4.11 1/4. Urea and Anhydrous led decliners with potash and DAP trailing along. Declines in farm diesel were small but welcome, and LP continues to slog higher.

MAP, 28%, 32% all moved higher, but moves in the regional average were small. As potash and urea level off, we expect fertilizer to work toward historic margins, correcting as needed to align with typical price spacing.

Corn Futures --

December corn futures are mostly steady to slightly lower opening today at $4.32 3/4 -- off a dime from last week's report. We expect incoming yield data to continue to pressure corn futures. Adding to pressure on corn is the suspicion that overseas buyers will tender imports of corn while the USDA and other government monitoring entities are down. This could mean the export demand December corn so desperately needs may come and go under the cover of shutdown. This would be price negative for corn futures, and put even more pressure on already low priced nutrient.

The ZCZ/NH3 spread currently lies at +11.54. When comparing one acre of expected new-crop revenue to the price of one ton of anhydrous ammonia, we find anhydrous priced premium to corn returns by 11.54. We take a closer look at the implications of this relationship in Tuesday's weekly feature, The N Files.

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

Regionally --

Anhydrous softens $3.80 to $703.94; UAN28 firms one dollar week-over to $317.76; UAN32 firms $2.86 to $357.00; Urea $5.47 softer to $457.21.

DAP $2.96 lower to $546.76; MAP 24 cents higher to $567.21. Potash falls $2.70 to $491.29.

Farm diesel down 3 3/4 cents to $3.495 -- 20 1/2 cents below year-ago. LP added 1 1/4 cents to $1.542 -- 19 1/4 cents above year-ago.

Nutrient/Fuel
9/30/13
10/7/13
Week-over Change
Current Week
Year-Ago
Anhydrous
$709.03
$707.74
-$3.80
$703.94
$852.42
DAP
$560.73
$549.45
-$2.69
$546.76
$644.50
MAP
$566.47
$566.97
+$0.24
$567.21
$662.58
Potash
$492.90
$493.99
-$2.70
$491.29
$603.00
UAN28
$314.19
$316.76
+$1.00
$317.76
$380.08
UAN32
$353.23
$354.14
+$2.86
$357.00
$429.44
Urea
$461.57
$462.68
-$5.47
$457.21
$593.75
Farm Diesel
$3.543
$3.533
-$0.03 3/4
$3.495
$3.70
LP
$1.539
$1.53
+$0.01 1/4
$1.542
$1.35
Composite
384.802
384.09
-1.18
382.91
463.93

 

Last year's pricing was well above today's peg with NH3 now $148.48 below year-ago; DAP $97.74 below; MAP $95.37 below year ago; Potash $111.71 below; UAN28% $62.24 below year-ago; UAN32% $72.44 below and urea currently $136.54 below the same time last year.

Anhydrous Action --

Seven of our twelve states moved lower during the report week ended Friday, Oct. 11 and as December corn continues to face pressure, anhydrous was forced lower as well. The biggest declines were $18 falloffs in North Dakota and Missouri with Minnesota dipping nearly 10 dollars. Movement outside those three states was confined to $3.75 or less with three states unchanged.

We expect the steep declines have exhausted themselves. The current downward trajectory in select states is attributable to lagging corn futures. We expect corrective shuffling to take place over the next few weeks, and the downside will be ruled by Dec. corn.

State NH3
Previous Week
Change
Current Week
Iowa
$671.74
-$1.58
$670.16
Illinois
$701.13
+$2.34
$703.47
Indiana
$771.71
-$0.55
$771.16
Wisconsin
$695.95
unchanged
$695.95
Minnesota
$667.39
-$9.57
$657.82
South Dakota
$695.00
+$3.75
$698.75
North Dakota
$682.02
-$18.11
$663.91
Nebraska
$612.46
-$2.52
$609.94
Missouri
$672.37
-$18.26
$654.11
Kansas
$613.15
-$1.14
$612.01
Ohio
$915.00
unchanged
$915.00
Michigan
$795.03
unchanged
$795.03

 

Near Term Outlook --

Near-term look for pressure on deferred corn contracts to pressure nutrient and as no fresh export data is available, the demand this market needs may be serviced while the government is in standown. This would take price strength out of corn futures with the burden of rally potential placed squarely on the supply side. As we said above, however, futures have found little to excite pricing in the early harvest numbers and this will hold nutrient in place and perhaps inspire just another week or so of retail declines, as the pace of fall applications picks up.


Photo credit: D. Michaelsen, Inputs Monitor

 

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