U.S. phosphate producers announced more production cuts earlier this month and asserted that current phosphate prices are “attractive to farmers”. But when compared to the price of corn, phosphate prices may have farmers doing a little curtailing of their own.
Potash producers have been scrambling to muster returns to shareholders and stop the bleeding in global potash markets. Meanwhile phosphate posts the smallest year-over decline of all our surveyed fertilizers.
The relationship between potash and corn futures grabbed our attention this week. We take a closer look at the ups and downs in the corn market and how potash has responded in the past.
This week we take a quick look at the possible influences of the U.S. dollar and WTI crude oil on the nitrogen segment. All four of the nitrogen products in our weekly survey are priced below expected new-crop revenue and should be considered at value levels.
Tuesday’s open in WTI crude oil futures has a story to tell. Crude market bulls were gunning for continued rejection of a two-handle on crude oil, but Tuesday’s market action pressured the front-month crude oil contract below $28.00 per barrel for a short time.
The move higher in crude oil futures last week was based on short covering and on rumors of an OPEC production cut. With the addition of Iranian supplies, OPEC’s output is now at 32.60 million barrels per day, roughly 1 million barrels per day above expected demand.
P&K producers have been playing prevent defense amid struggles in the agricultural sector. Potash remains oversupplied globally, but phosphate producers have been very conservative with their production strategy.
As economic sanctions are peeled away from this Middle-eastern powerhouse, Iran has its eye on increasing fertilizer production with the goal of becoming an agricultural island.
All fertilizers and fuels were lower for the second consecutive week. Anhydrous continues to lead to the downside and the really exciting news in this week’s price survey is, despite falling corn prices, anhydrous ammonia outpaced corn’s declines and the gap between the two narrowed to just 97 cents. So as corn prices have fallen, NH3 has fallen farther, faster.
