March In Review -- Anhydrous Behaved, DAP & K Slid as Spring Took Its Time

April 2, 2013 07:38 AM

A comparison of pricing from the end of February to the beginning of April details what we had suspected -- generally flat nutrient pricing as the spring supply has reached the bulk of end users. Potash gave a little along with DAP; Anhydrous behaved itself, and UAN and Urea moved higher.

December '13 Corn --

December corn futures took a bath late in March but had little impact on nutrient pricing as many growers had forward booked before the first of the year. But if corn futures don't find a little demand strength, late season applications could be limited by lower expected new-crop revenue. In that scenario, trends suggest retail pricing would have to ease to attract demand of its own.

Natural Gas --

Natural gas moved higher for the entire month as spring took its time getting here. May 13 natural gas opened March first at $3.535 and closed April first at $4.015. $4.00 had been strong psychological resistance but once violated, the upside opened to the contract high on March 28 at $4.121.

May '13 nattie fell sharply today and is currently testing support at $3.94. A move below $3.94 puts bears' next target at $3.90 and this morning's sharp decline suggests profit takers have exhausted the near-term upside. With temperatures on the rise into spring, weekly drawdowns for home heat will diminish and until the need for air conditioning revives natural gas demand for power generation, look for nattie to explore the downside.

The following table breaks down nutrient and fuels pricing action as reported to your Inputs Monitor from the end of February to the end of March. All nutrient values are listed per ton -- Farm Diesel and LP by the gallon.

Farm Diesel
Feb. ended
March ended
Month-over change


NPK --

Anhydrous added just 67 cents during March to end at $882.00; 28% solution posted the largest gains of all NPK during March adding $6.42/ton to $394.25 and 32% chimed in with a $1.78 increase of its own to end at $435.22. Urea moved $4.91 higher to $570.66 making it a bull-run for all nitrogen products -- actually more like a calf-run -- with just a $13.78 total gain for all nitrogen products combined.

Lower ammonia prices out of Trinidad and Tobago and rumors of a resolution to Egypt's mysterious natural gas difficulties may help to lower the cost of production. But a number of new technologies, greenfield projects and expansions bring the promise of less expensive domestic nitrogen and decreased reliance on volatile foreign product in the next few years.

DAP prices fell month-over by $3.50/ton to $640.41 and MAP moved slightly higher, adding $0.09 to end at $655.00. I expect to see positive numbers from upstream production toward the five-year average supply later this month and that could move DAP/MAP pricing lower.

Potash is still in good supply and fell during March to $580.50 -- a decline of $3.16. Production has resumed in full in Saskatchewan and PotashCorp has weathered the demand storm. Strong inventories there should help keep pricing where it is, and with so much on hand, it would take a major offtake to impact prices.

Farm Fuels --

Farm Diesel prices fell a mild three cents to $3.550 during the month and LP fell a tenth of that -- down $0.003 to $1.495. We may see some short-term gains in LP as winter required more of the national supply than was expected. This put upward pressure on both LP and Farm Diesel. As with natural gas, these two will be affected by temperatures as much as anything and drawdowns to distillate and propane stocks for power generation to answer increased air conditioner use could have the same effect as cooler temperatures.

Farm Diesel and LP need a long stretch of mild spring weather that allow Americans to open their windows rather than reaching for the thermostat. This would give the distillate and propane supplies a chance to catch their breath, and the ensuing additions to the national storehouse would help lower prices.


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