Nutrient Short-Term Outlook

February 15, 2013 08:42 AM

Downstream outlets report they are well into resupplying in anticipation of the spring application, but both forward-booked and delivered purchases are slow as most end-users are waiting out recent upticks in N&P pricing. K inventories at all points in the supply chain are very high and K pricing in the short-term is reflecting the ample stocks.

Corn Prices --

Lackluster demand is moving corn pricing lower in the near term. During the week ended Feb. 7, corn export sales spiked 34% week-over, but what the market really needs to move higher is sustained demand. Lower corn futures pricing would help depress NPK pricing in the short-term. Expectations of higher corn plantings this spring will loosen domestic supply but the western cornbelt needs rain badly. Weather concerns will impact Dec. 13 corn and may signal upside potential for nutrient pricing this summer.

South American weather has improved as the safrinha crop goes in. The level of expectation for the safrinha crop will impact corn futures here at home. If Brazil can get a good crop in the ground, upside potential will be limited for U.S. corn, and NPK should moderate if December 13 corn leads the way.

Currently December 13 corn futures are at $5.63. That puts expected new-crop revenue at $860.80 per acre according to our figures. Your Inputs Monitor holds to 18% of new-crop expected revenue as pricing resistance.

Given that, 18% = $154.94 per acre for your total nutrient package is our new pricing ceiling.

N --

Ammonia has eased slightly internationally and high NH3 demand for the spring spread is less certain than was once thought. While up slightly week-over in the Inputs Monitor Index, Urea is expected to stabilize at current levels but will likely respond with a slight uptick to increased seasonal demand on the ground closer to spring. UAN solutions also posted gains last week, but are also expected to follow Urea on a sideways path until the start of spring applications.

Prices are still high year-over for N, but loosening ammonia stocks worldwide and decreasing spring NH3 demand estimates suggest some room to the downside in the coming weeks.

P --

Loosening ammonia stocks help out here as well, but DAP and MAP moved slightly higher week-over. Increasing producer and downstream inventory are keeping a lid on upside action here as P producers in Morocco and Saudi Arabia are back online. Retail pricing for P should remain at-or-near current levels as end-user demand seems content to wait for pricing to fall before booking any P.

K --

2013 may prove to be an excellent year to bank some Potassium in the soil. Inventories up and down the chain are very high year-over and international sendouts to India and China have benchmarked prices in the $400-$425 range FOB. Retail pricing is at $585.08 in the Inputs Monitor Index this week and while the suggestion of more downside room has been raised, international purchases signal the bottom dollar -- in those markets anyway -- has been reached.

High producer and downstream inventory will limit upside potential for K in the short term and while international customers have found deep discounts, downstream resupply purchases are nearly complete, suggesting pricing points are in place at the co-op. This will limit downside potential as well. Look for K to move sideways if at all in the short term.

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