P&K Today: Inventories Mount as Alberta Threatens Harvest Clipper

October 17, 2013 06:49 AM
 

Weather may once again become a concern for growers looking to wrap up harvest and lay fall fertilizer as forecasts are calling for wetter, cooler weather through the next several days. Northern states carry the highest probability of precipitation with the suggestion of snow in Minneapolis on Sunday morning. Weather forecasts have more than one Alberta Clipper lined up to move southward and the result will be several days of cooler weather with precipitation chances highest up north.Picture1

Growers have made excellent progress on the soybean harvest and as many corn fields are still a bit behind, took some time to spread manure over bean stubble. Harvest delays could equate to delays in fertilizer applications and if a blanket of snow falls in the next week or so, even trace amounts could be enough to slow progress.

Many are still waiting out expected declines in P&K, and fall weather delays could prolong the wait through winter. However, by spring, the rumors of potash price declines will have been tested and we could be looking at a much different price picture when it comes to P&K. Potashy o

Working in our favor is the current state of North American inventories which are reported in the neighborhood of 40% above normal. This will keep pressure on prices and will likely slow production.

This week --

  • DAP $97.74 below year-ago pricing -- down $2.69 on the week to $546.76/st.
  • MAP $95.37 below year-ago -- up 24 cents this week to $567.21/st.
  • Potash $106.84 below-year ago -- down $2.70 to $491.29/st.
  • December corn opened today at $4.42 with basis 3 1/2 cents firmer on the week to 7 1/4 cents below December futures.

 

The following is an updated table of P&K pricing by the pound.

P&K pricing by pound -- 10/17/2013

DAP $P/lb

MAP $P/lb
Potash $K/lb
Iowa
$0.62
$0.54
$0.42
Illinois
$0.55
$0.52
$0.39
Indiana
$0.56
$0.53
$0.40
Wisconsin
$0.53
$0.51
$0.38
Minnesota
$0.57
$0.55
$0.41
South Dakota
$0.55
$0.52
$0.43
North Dakota
$0.57
$0.51
$0.38
Nebraska
$0.57
$0.54
$0.44
Missouri
$0.58
$0.54
$0.41
Kansas
$0.56
$0.55
$0.43
Ohio
$0.56
$0.53
$0.40
Michigan
$0.65
$0.56
$0.39
Average
$0.57 1/4
$0.53 1/4
$0.41
Year-ago
$0.68
$0.62
$0.50

 

Wholesale -- Phosphatey o

MosaicCo reports DAP moved lower over the past week at Tampa, Central Florida and Morocco, moving sideways at NOLA. MAP for Brazil also sideways, unchanged on the week while raw phosphate rock from Morocco softened slightly. U.S. ammonia slid sideways while wholesale sulfur fell $20.00/tonne.

Wholesale MOP moved slightly lower in the U.S. Corn Belt as buyers wait out declines.

In retail action, DAP moved $2.69 lower to a regionwide average of $546.76; MAP 24 cents higher to $567.21 and Potash fell $2.70 to start the week at $491.29.

Near-Term Outlook --

  • Look for potash to level off at current levels with mild upside potential based on corn futures.
  • Sideways movement in wholesale ammonia and an end to the bleeding in potash will hold phosphate in place at or near current pricing.

 

The year-over pricing margin widened this week for all four of the below nutrients. Potash added 1.5% from last week's 17% below year-over pricing; DAP slid another 1.1% below year-ago; MAP softened 0.2% to widen the year-ago margin to 14.3% below year-ago and anhydrous fell another 1.4% during the week to end at 17.4% below last year's price at this time.

These moves are small by percentage and indicate the downside is running out of steam. However, P&K inventories are currently very high in North America as demand is still generally in stand-down. Snow is a real possibility across the northern tier of the Corn Belt according to forecasts from NOAA, and as the applications window threatens to narrow, buyers will be faced with the choice of rushing to apply fall P&K or deferring to spring.

 
Current price/short ton
Percent of year-ago
Potash
$491.29
-18.5%
DAP
$546.76
-15.1%
MAP
$567.21
-14.3%
NH3
$703.94
-17.4%

 

Perspective -- anhydrousy o

If you have not yet booked fall potash we have recommended you have 75%-100% of fall needs filled by now and at least 20% of spring needs as a hedge against a winter potash correction. Prices are so far below year-ago it is hard to go wrong at this point, but $4.46 has shown itself to be tough resistance for December corn and the hurdles are layered every 6-10 cents to the August 27 daily high of $5.04 1/4.

A violation of resistance around $4.50 may be enough for Dec corn to spur P&K higher, but we see sideways movement for nutrient on the basis of high producer inventories, very little buying interest, and the bleak outlook for an upside breakout for deferred corn contracts.

 


 

 

 

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