I got a question in from a Market Rally Radio listener for our Thursday show regarding farm diesel in 2016. The question was simply, “What’s diesel going to do in 2016?” Behind the simplicity of a question like that are dollars and cents that have to be spent and since the outlook for the ag sector in general isn’t the strongest, margins will be tight.
P&K spreads have been hard to figure for a variety of reasons, but we are honing in. This week, we turn our attention to the early stages of building our phosphate margin analysis.
A fairly quiet week in the P&K world. Phosphoric acid prices gave hints of easing, but volatility in acid prices for producers still makes future pricing difficult to pigeonhole. Potash is in a state of global oversupply and prices continue to dip lower.
This week’s sharply lower diesel price was driven by downside action in Michigan, Indiana and Nebraska. Propane remains in good supply with current stocks 23 million barrels above the same time last year. Production dipped just slightly on the week as demand perked up for a Midwest snowstorm.
Low potash prices are creating a stir among global producers. Potash markets are usually very quiet. We take a closer look at what is behind all the chatter and what it means to us.
Fertilizer prices reversed course this week after having firmed the past two weeks in a row. The outlook for nitrogen has improved in recent weeks and UAN’s price movement this week basically erased what was gained in upside action over the past weeks.
We have been watching the downtrend in fertilizer prices for several weeks now and this marks the second consecutive week in which our Nutrient Composite Index firmed. The week-over changes in fertilizer prices have been small in the regional averages and driven by a few states making corrective moves. At this point, those moves have mostly been to the upside.
Once both planned and unplanned maintenance at refineries are complete, expect farm diesel prices to soften. We often find opportunities to lock in attractive prices in December and we expect this year to be no different.
Potash and phosphate prices continued lower this week, and potash producers are nervous that the global potash supply overhang will force prices lower, especially given weak U.S. grain fundamentals.
