If we were handing out medals for declines in this week’s price survey, anhydrous would have come in dead last. All of our fertilizer and fuels are lower this week, but the price relationships between fertilizer products has a lot to say about where we should be, and where we are headed before harvest.
NH3, UAN32% and urea are all priced below one acre of expected new-crop revenue. But UAN28% remains priced about 10 bucks above that figure on an indexed basis.
Crude oil production factors are weighing on heating oil futures which will pressure farm diesel near-term if the momentum remains downward. Propane is 11 cents below year-ago and may still have another few cents to give before posting the summertime low.
The story of the Belorussian Potash Company continues to unfold and as major global potash importers come to the table, the Former Soviet Union K producers appear to be more than happy to undercut global prices again this year.
Distillate supplies are benefiting from increased refinery capacity and utilization, but, as with crude oil, declines in U.S. distillate supplies are keeping a hard floor under heating oil futures, and farm diesel. The first of July is upon us and we expect to book propane during that month.
Distillate supplies rebounded this week according to EIA which longer-term should be price negative on farm diesel. Also working in favor of lower diesel prices is WTI crude oil’s rejection of the $50 level.
Leaders from OPEC met this week in Vienna to discuss output and other issues. Despite still-strong global crude oil inventories, the leaders of OPEC decided to maintain current production levels.
Chinese distillate exports are likely to rise as U.S. stocks decline seasonally. Firmer crude oil will limit the downside for farm diesel, as will agricultural demand for the time being.
LimelightPlayerUtil.initEmbed(‘limelight_player_501798'); AgDay anchor Clinton Griffiths and Davis Michaelsen discuss the current state of fertilizer prices and what will drive price action through the summer months.
