Inputs Monitor Regional Market Report -- Weather Reigns Supreme, Nutrient Flat

April 15, 2013 05:42 AM

Nutrient pricing fell across the board as the weather has yet to turn, placing a firm lid on demand. Seed and chemicals that have not yet been delivered are on their way to the farm. These low prices are not likely to last as natural gas futures set fresh contract highs and December corn futures continue to lose traction. Once the weather allows, iron in the field may impact fertilizer pricing and move N&P prices higher.

Decliners outpaced gainers -- in fact, it was a shutout -- this week falling 9.323 to gainers' 0.00 -- a margin of 9.323 in favor of bears. Trends suggest this may be our seasonal low for spring, and we expect this weather market to continue. As natural gas and corn futures throw fits, our flat nutrient pricing is driven by soil temperatures. But once winter opens the barn on the 2013 application season, the cows may stampede to get out, setting up a bull market for nutrient.

The moisture situation is improving with the western portions of the Corn Belt still very thirsty. A spat of dry weather would actually support a Dec corn rally and warmer temperatures would ease natural gas pricing, but these would inject positive news into the market and may also contribute to a bullish run near-term for fertilizer.

Anhydrous fell $0.14 to $880.69; UAN28 drops $0.23 to $397.93; UAN32 moves $0.41 lower to $435.25; Urea $2.43 lower to $570.65 -- last week Urea was up $2.42, and this week's decline of $2.43 retraces that and adds a penny per ton in growers' favor.

DAP continues to move lower dropping $2.92 to $635.91; MAP slightly lower, falling $0.48 to $654.43.

Potash moves $1.78 lower to $578.88.

Farm diesel unchanged at $3.530; LP fell just $0.001 to $1.495. Farm diesel and LP pricing were unchanged in all states except Iowa where both moved 0.001.

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DAP posts the strongest declines during the report week, falling $2.92/ton week-over with MAP shedding $0.48/ton. The word from upstream is that phosphate production continues to lag, and while small advances have been made in the last month, inventory levels still have some work to do. To the good, phosphate rock out of Morocco is down $3.00/tonne over the week, and ammonia delivered to Tampa is down $10.00/tonne which may allow P producers to play a little catch up. But if we see any sharp price increases in the coming weeks, it will likely be DAP to blame.

Declines in ammonia are also benefiting anhydrous pricing as NH3 is on a six week bear-run. Improvements in field conditions may inspire an uptick here as well, but forward-booked purchases are expected to have been large enough up to now to limit hand-to-mouth demand in the next few weeks.

December '13 corn opened today at $5.50 and has been on a dive ever since -- currently (10amCT) at $5.39, showing some improvement in the last short while. If sold at these prices, 2013 new-crop revenue would amount to $822.40/acre. Ironically, in this post-drought year, what both corn futures and natural gas pricing need is about a week and a half of warm, dry weather. This would end the winter heating season, easing upward pressure on nattie futures while at the same time, growers could get some much needed field work done, lending some strength to December corn futures.

Until the weather picks up, look for front-month natural gas to continue its tantrum at the top of its range, and expect corn futures to limp along at the low end. In response to the clatter in the futures markets, fertilizer pricing appears to be on vacation until true spring.





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