P&K Today: Propane Prices Pressure P&K Decisions

January 23, 2014 07:03 AM
 

DAP and MAP prices edged higher this week while potash softened.Picture1

It is widely assumed that P&K applications may be small in the coming spring. That line of thought is based on low corn futures. As of today's open, expected new-crop revenue based on Dec. '14 futures lies at $675.20/acre for corn. At current prices, a 175lbsN/acre application of NH3 and UAN28% leaves about $40.00 for P&K, based on historic budgeting data.

But propane prices have been a killer so far this year, and there is no relief in sight with prices this week headed to $3.00 territory.

As propane prices continue to climb, farm budgets may find themselves out of whack and the added drain of expensive propane on the bottom line may work to encourage growers away from P&K. That $40.00 left over in farm budgets from above for P&K will likely be soaked up by propane -- natural gas is no saint here either, and natgas users face the same dilemma with Feb nattie today pushing $5.00.Pict42ure1

We advised late last week to increase coverage on phosphate to 50% for spring as current prices are unsustainable. That was good advice and prices ticked higher early this week. However, summer LP fills are starting to run out and as delivery constraints in many areas make the winter fill problematic, the added expense will have to come from somewhere. We expect the current propane crisis to contribute to limited P&K applications by trimming farm budgets. That could be price negative for retail P&K and compels us to stand pat on bookings for spring.

We are currently 50% filled on DAP/MAP for spring and 30% on potash. We see some upside risk in phosphate, but potash moved lower this week and may do so again next week. If you are not at 50% on P and 30% on K for spring, get caught up at current prices. We will wait for a stronger bounce from both before increasing coverage.

This week --

  • DAP $131.90 below year-ago pricing -- up 6 cents on the week to $508.43/st.
  • MAP $127.36 below year-ago -- up $3.40 this week to $530.14/st.
  • Potash $121.31 below-year ago -- down $2.94 this week to $463.77/st.
  • December 2014 corn futures opened 4 cents lower this morning than our last P&K Today at $4.47 with the national average cash corn price 1 3/4 cents higher from last week at $4.29. National average corn basis firmed 1 1/4 cents on the week to stand 1 1/2 cents above March futures.

 

By the Pound --

DAP is 1/4 cent higher at 53 cents/lbP2O5; MAP is unchanged by the pound at 49 1/2 cents/lbP2O5; Potash also unchanged on the week at 38 1/2 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 Jan. 17, 2014.

P&K pricing by pound -- 1/23/2014

DAP $P/lb

MAP $P/lb
Potash $K/lb
Iowa
$0.53
$0.49
$0.38
Illinois
$0.50
$0.49
$0.38
Indiana
$0.51
$0.51
$0.38
Wisconsin
$0.49
$0.52
$0.35
Minnesota
$0.51
$0.49
$0.39
South Dakota
$0.51
$0.47
$0.38
North Dakota
$0.56
$0.48
$0.37
Nebraska
$0.51
$0.49
$0.43
Missouri
$0.53
$0.48
$0.38
Kansas
$0.55
$0.49
$0.42
Ohio
$0.55
$0.51
$0.38
Michigan
$0.61
$0.51
$0.38
Average
$0.53
$0.49 1/2
$0.38 1/2
Year-ago
$0.68
$0.61
$0.48

 


 

 

 

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