Inputs Monitor Regional Index: Nutrient Slightly Higher -- LP Donates a Penny

February 10, 2014 09:28 AM
 

 

Declines tallied once cent to gains' $12.11 1/2 in the regional averages. Big movers are DAP, UAN28% and urea which are all higher on the week. LP of all things offered the only downside move, falling a full penny to $3.81.IMG 0257

We were watching the numbers closely when this morning's WASDE report came out of USDA. A solid rally in corn futures would put some confidence back into booking fertilizer, but the report did little more than maintain the status quo. This will help limit fertilizer pricing near-term. However, we believe retail prices have given all they intend to on the great bear run of 2013-'14 and sources from up and down the supply chain foresee higher pricing ahead.

We agree that fertilizer prices are headed higher and have positioned our readers at 80% on phosphate, UAN and urea, 60% on anhydrous ammonia, 30% on potash and 50% on farm diesel for the upcoming planting season.

We advise today to book potash to cover up to 80% of spring needs. China has set the global floor price and the market generally takes strong cues from that number. We have it at $305 from Uralkali and a 'comparable' figure from Canpotex for their recent tender to China. This is down significantly from last year's $400/tonne, but the discount is already baked in to the current retail price.

Since the floor has been set, and retail prices are still in a position of having overshot declines, upside risk for potash outweighs downside potential more than this week's 35 cent retail increase would imply.

Corn Futures -- Picture1

December 14 corn futures closed Friday at $4.60 -- that's a full dime higher than the previous Friday's close, putting expected new-crop revenue $16.00 firmer on the week at $696.00. With anhydrous priced at $646.89 this week, the ZCZ/NH3 spread widened 15.60 points and now lies at -50.11.

This is the widest we have seen this margin in a long time making this week the best time in months to book anhydrous against expected new-crop revenue. The chart at right shows expected new-crop revenue has moved higher, but this is not a report reaction to today's S&D. We collect our Dec. corn price from Friday's close rather than a Monday price. This better reflects market conditions at the time our fuels and fertilizer data is collected.

On that basis you will be hard pressed to find a better time to cover anhydrous for spring. We are currently at 60%. If you are not that far with bookings, get caught up today. We are in no hurry to fill the remaining 40% for spring. Prices may begin to recover, but this week, wholesale ammonia moved sideways at $415 and we will wait for wholesale prices to indicate a hard bounce and finish our spring/summer fill at that point.

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Regionally --

Anhydrous firms 40 cents to $646.89; UAN28 $2.91 higher week-over to $338.16; UAN32 firms $1.66 to $364.83; Urea $1.77 higher to $487.23.

DAP $3.83 higher to $524.07; MAP $1.19 higher to $542.88. Potash firms 35 cents to $462.18.

Farm diesel firms 1/2 cent to $3.47 1/4 -- now 2 1/2 cents above year-ago. LP softened 1 cent to $3.81 -- now $2.33 cents above year-ago.

Nutrient/Fuel
1/27/14
2/3/14
Week-over Change
Current Week
Anhydrous
$650.00
$646.49
+$0.40
$646.89
DAP
$514.83
$520.24
+$3.83
$524.07
MAP
$533.22
$541.69
+$1.19
$542.88
Potash
$461.72
$461.83
+$0.35
$462.18
UAN28
$326.20
$335.25
+$2.91
$338.16
UAN32
$359.47
$363.17
+$1.66
$364.83
Urea
$472.41
$485.46
+$1.77
$487.23
Farm Diesel
$3.40
$3.46 3/4
+1/2 cent
$3.47 1/4
LP
$4.09
$3.82
- 1 cent
$3.81
Composite
369.270
373.495
+1.35
374.84

 


 

 

 

 

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