World wholesale prices as reported by Mosaic show favorability for DAP/MAP producers, falling urea prices and a slight uptick in delivered potash on the wholesale market. Al three components of DAP fell week-over in wholesale action with phosphate rock from Morocco shedding as much as $13.00/ton. Ammonia eased by $10.00/ton and while sulfur remained unchanged during the week, the price of a ton of sulfur remains $22.00/ton below year-ago.
DAP processing margins rose slightly to $268/ton -- a $4.00 increase year-over -- and this is what producers need to see if production increases are to make gains to the lagging phosphate supply against the five year average.
Wholesale urea prices fell at Yuzhnny, the Middle East and in the U.S. Corn Belt and moved sideways at NOLA. Prices are well below last year's price at this time and some would say that suggests room to the upside ahead. But I believe the year-over discrepancy is due to a correction and do not expect urea to move higher in wholesale action when ammonia still has so much to give compared to last year.
This week's wholesale ammonia price was $10.00/ton less than the week before but remains $225.00 above year-ago. Ammonia certainly has more downside potential given the year-over comparison and that should keep urea and DAP from finding much upside action near-term.
Potash did move higher in Midwest wholesale markets, but this may be what Chip calls a 'dead cat bounce' -- even a dead cat will bounce if you drop it from high enough. Prices are nearly $100.00/ton less than last year and this dead cat bounce could easily be looked upon as a timid correction.
With declining prices and downside room yet to give against last year, ammonia should continue to slide. This would give some traction to the downside for nitrogen products in particular, and especially urea. We may even see anhydrous fall if these declines continue.
Couple falling ammonia prices with declines in wholesale phosphate rock and sulfur and you've got a recipe for lower prices in finished phosphate products. This points to favorable pricing for end users and strong margins for upstream DAP/MAP production.
Despite potash's upward nod, I don't expect much to come of it anytime soon. Potash added $0.42 cents in last week's Monitor Index, but Canadian supplies will continue to limit upside action here until further notice.