Where is the Seasonal NPK Low?

03:29PM Jan 22, 2013
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 Since 2008, when fertilizer pricing and corn futures pricing coupled, trends have suggested that four times each year nutrient pricing will find fresh support, with the winter dip somewhere in mid-January. Fresh fall support was established in 2012 just before Thanksgiving in major indicator stocks. That move to the downside came right on time, but we are just under two weeks away from February 1 and nutrient pricing continues to move basically sideways to only generally lower.

Anhydrous continues to hold out above last year's pricing. This week the Monitor posted a region-wide price of $879.08 per ton -- the low was in Nebraska at $822.00. Ohio pushes the regional average higher with NH3 reported at a state average of $940.00. The current regional price of $881.08 per ton is down from the week before, but only by two dollars. Ammonia pricing coupled with strong expected spring application demand has held this market prisoner to the upside.

UAN28 also moved slightly higher over the week while UAN32 shed only $0.78 per ton. DAP pricing took a friendly turn dropping a robust $8.08 per ton to $640.32. MAP fell as well, but only by forty cents. Potash decreased $3.25, but the expectation is that K will continue to fall, taking cues from pricing resistance in international sales.

A grower was asking me about farm diesel pricing last week. The Inputs Monitor had issued an alert in December with the sense that increased demand would push Ruby Red higher as temperatures fell through the winter. On a revised forecast, the price continued to explore the downside and the grower asked how to know when the perfect time to buy is.

The 'perfect time' to make a purchase in these volatile markets sometimes -- unfortunately-- can only be recognized once it has passed.

Most nutrient has been on a downward trend since the close of the fall application season, and prices may continue to fall through the dead of winter. But downstream suppliers are beginning to resupply in earnest and new pricing points are being set.

A modest drop in the indicators did take place early in January, but failed to establish fresh technical support. Trends suggest a much more dramatic establishment of seasonal support is required before a seasonal low can be pegged. But on the heels of the drought, and all of the havoc it has rained down on the agricultural sector, time is running out for the annual January low.

Phosphate inventories in North America have rejoined five-year levels and a more adequate supply signals pricing may continue to ease. DAP fell a full eight dollars last week and MAP eliminated nearly half of the 90 cent gains from the previous week. Potash is also lower this week but has been falling incrementally since the first of December.

So where is the seasonal low? Is this the perfect time to make a purchase? With NH3 nodding to the downside for two consecutive weeks and ammonia also falling (slightly) in international markets most buyers are willing to hold off and wait-and-see if anhydrous makes a more substantial move to the downside. P&K are beginning to look attractive and the perfect time may be here. If the perfect time has come and gone for this winter, the next low is due in early March.