P&KToday: Potash Snubs Grain Gains

March 6, 2014 06:00 AM
 

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Phosphate continued to run higher this week. We have seen DAP and MAP seesaw higher for weeks with DAP adding strong gains while MAP gains only mildly. Then, the following week, MAP gains strongly and DAP gains only a little. This week has MAP adding $14.40 to the short ton price as DAP adds $8.37. The week before, DAP was the big gainer adding $19.33 while MAP firmed only $7.25. Inventories are tight, but not alarmingly so -- just enough to justify a much needed price recovery for spring.

Next week, it will be DAP's turn to extend gains and for MAP to stay put. But if rather than moving higher, DAP should happen to setback, we will be on it like a dirty shirt, and reward the setback by filling the remaining 20% we still need for spring. It is that setback we are waiting for as inventories and restocking will continue to demand a premium on fresh supplies.

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Potash ticked six dollars lower this week in regional averages led by declines in Nebraska, Iowa, Kansas and Michigan. Potash, however, is as tied to corn pricing as Nh3. UAN solutions, urea and phosphate have their own pied pipers and while corn returns do play a role in budgeting and purchasing decisions for all nutrient, major market moves in corn futures have had the strongest impact on Nh3 and K pricing over the past 18 months.

Questions are also surfacing regarding potash exports coming out of Russia in this time of uncertainty and national tension. Uralkali once accounted for roughly 20% of global potash shipments. If trade sanctions take Russian potash off the market, the result could be a global supply pinch. However, sanctions are not likely to come from Russia's #1 potash export destination, China. China's demand alone is likely enough to import the difference and moderate global pricing. Add to that list other Oceania, Indonesia and Latin American destinations and a supply overhang looks less likely.zcz14

War premium -- and trader activity -- inflated corn, beans and wheat pricing earlier this week on fears that Ukraine grains would be held up at port by war. Many analysts dismiss the impact of war premium pricing on commodities out of the Black Sea, speculating that neither Russia nor Ukraine can afford to let export revenues slip while they are at war.

The long and the short of it is that Russian potash will make it to market, and gains in corn futures here in the states have not had a chance to bake-in to current potash pricing. I want to see what happens with the current setback in retail potash pricing, but I'd like to see our spring needs filled before prices have a chance to run higher. Don't forget the sliding price action Uralkali already imposed on the market. The downside can only take so much, and must surely have already been exhausted by now.

We held out on Nh3 as long as we could and took the hint this week to fill 100% of spring anhydrous. It will take similar action next week in potash to convince us to pull the trigger on unpriced spring potassium. I have a hard time saying potash will reverse the full 6 dollars it retreated this week all at once. But the stage is set for potash to follow nutrient higher. UAN, urea and phosphate have all forged strong recoveries and Nh3 and potash will follow, especially now, with December corn eyeing $5.00.

DAP and MAP prices moved higher again this week, potash softened.

  • DAP $87.71 below year-ago pricing -- up $8.37/st on the week to $556.20/st.
  • MAP $77.06 below year-ago -- up $14.40/st this week to $577.85/st.
  • Potash $122.95 below-year ago -- down $6.07/st this week to $460.71/st.
  • December 2014 corn futures opened 16 3/4 cents higher this morning than our last P&K Today at $4.82. The national average corn basis softened 12 cents from last week to stand 6 cents under May futures. The national average cash corn price firmed 14 1/2 cents from last week to $4.73.

 

By the Pound --

DAP is 3/4 cent higher at 57 1/2 cents/lbP2O5; MAP is 1 1/4 cent higher at 54 1/4 cents/lbP2O5; Potash softens 1/4 cent on the week to 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 28, 2014.

P&K pricing by pound -- 3/6/2014

DAP $P/lb

MAP $P/lb
Potash $K/lb
Iowa
$0.58
$0.52
$0.39
Illinois
$0.56
$0.51
$0.38
Indiana
$0.58
$0.54
$0.38
Wisconsin
$0.52
$0.54
$0.36
Minnesota
$0.55
$0.53
$0.38
South Dakota
$0.62
$0.57
$0.39
North Dakota
$0.55
$0.57
$0.38
Nebraska
$0.57
$0.53
$0.40
Missouri
$0.60
$0.55
$0.39
Kansas
$0.57
$0.56
$0.38
Ohio
$0.60
$0.53
$0.38
Michigan
$0.60
$0.57
$0.38
Average
$0.57 1/2
$0.54 1/4
$0.38 1/4
Year-ago
$0.68
$0.61
$0.48

 


 

 

 

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