P&K Today: How Do You Spell Recovery? R-E-T-A-I-L

February 13, 2014 06:15 AM
 

Potash, DAP and MAP prices all moved higher again this week.Picture1

We advised earlier this week to extend coverage on spring potash to 80% filled for spring (click here for more). The way the numbers line up suggests the potash price set by China, which includes a $20 freight rebate from Uralkali may actually lie at a premium to U.S. Retail potash prices. Since Canpotex has signed a similar deal at what they call a 'comparable price', we are certain that potash prices will move no lower than last week's price at a Midwest average of $461.83. Last week we noted, "eleven cents a rally does not make," and for you sticklers, this week's 35 cents really doesn't either, but K is up again this week and all indications are the best potash money is spent today. We do not expect a sudden spike, but with prices already below year-ago by $120.00/st, downside potential has dried up.

Meanwhile, MosaicCo. reports strong Q4 sendouts of phosphate which they believe signals price strength ahead for phosphate and potash on the basis of demand (more). Another interesting fact that has come to light is transport difficulties. We know what transport constraints have done to propane pricing, and while we do not expect phosphate prices to jump the same way as propane prices have, genuine transport problems could lead to spot shortages later on. This may be a headfake as part of the fertilizer industry's wishes to put the potash panic of 2013 and the ensuing price declines behind them. It cannot be denied that fertilizer's bottom line took a big hit in 2013 as demonstrated by recent earnings reports from more than one P&K producer.Picture5

This may oversimplify the reality of the situation, but it is clear that the industry needs higher P&K pricing for spring refills.

The fertilizer industry's appetite for retail price recovery is growing. Uralkali threw a wrench into what had started to look to investors like a 'sure thing'. The market needs to prove it can recover quickly and profits need to materialize for the fertilizer sector to capitalize on its former 'safe' investment status. A genuine recovery will have to include price strength in retail products.

Whether transport difficulties are backlogging supplies or not, there will be a price recovery, and if an excuse as convenient and pervasive as the weather gets the credit, it seems like something we could all swallow. But the truth of it is, P&K producers are desperate for good news and early demand signals now tell them that low expected new-crop revenues may not actually be low enough to scare growers out of P&K this spring. That will fuel price-optimism for producers and limit the downside for fertilizer from now until spring applications are in the soil.

 

  • DAP $117.26 below year-ago pricing -- up $3.83/st on the week to $524.07/st.
  • MAP $113.20 below year-ago -- up $1.19/st this week to $542.88/st.
  • Potash $122.90 below-year ago -- up 35 cents/st this week to $462.18/st.
  • December 2014 corn futures opened a penny higher this morning than our last P&K Today at $4.57 with the national average cash corn price 4 1/2 cents higher from last week at $4.40 1/2. National average corn basis softened 1 1/4 cent on the week to 1/2 cent above March futures.

 

By the Pound --

DAP is 1/2 cent higher at 54 cents/lbP2O5; MAP is unchanged at 50 3/4 cents/lbP2O5; Potash is also unchanged on the week at 38 1/4 cents/lbK2O.

The following is an updated table of P&K pricing by the pound as reported to your Inputs Monitor for the week ended February 7, 2014.

P&K pricing by pound -- 2/07/2014

DAP $P/lb

MAP $P/lb
Potash $K/lb
Iowa
$0.52
$0.51
$0.40
Illinois
$0.52
$0.49
$0.38
Indiana
$0.53
$0.51
$0.38
Wisconsin
$0.49
$0.54
$0.34
Minnesota
$0.52
$0.49
$0.38
South Dakota
$0.51
$0.49
$0.38
North Dakota
$0.55
$0.49
$0.37
Nebraska
$0.53
$0.50
$0.43
Missouri
$0.53
$0.52
$0.38
Kansas
$0.56
$0.52
$0.41
Ohio
$0.60
$0.52
$0.38
Michigan
$0.61
$0.52
$0.36
Average
$0.54
$0.50 3/4
$0.38 1/4
Year-ago
$0.68
$0.61
$0.48

 


 

 

 

 

 

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