P&KToday: Potash Producers Announce More Production Cuts

P&K was lower on the week.

• DAP $93.29 below year-ago pricing -- lower $4.01/st on the week to $485.32/st.
• MAP $94.37 below year-ago -- lower 62 cents/st this week to $495.51/st.
• Potash $121.05 below year-ago -- lower $3.08/st this week to $366.54/st.
• The average cash corn price figured in to P&K this week is $3.45.
• The national average corn basis softened 2 3/4 cents from last week to 3 1/4 cents below May futures. The national average cash corn price fell 6 3/4 cents from last week to $3.52 1/2. Basis is softer than the three-year average, which is 7 cents above futures for this week.

Prices for both phosphate and potash slipped at import locations and deferred phosphate contracts through April suggest a chance for lower priced phosphate in the coming weeks. However, we do expect demand to play a role in preplant phosphate prices. Since the assumption has been that P&K demand will be low for spring, sellers have been hesitant to get too aggressive on price. That will likely change as product begins to move. But since phosphate is overpriced compared to the rest of the fertilizer segment, sellers will have to be careful not price P out of the farm budget.

North American potash producers are stepping up their prevent defense. Last week we chided U.S. phosphate producers for cutting production once again. This week, PotashCorp said it will curtail production at 2 more mines after having shuttered a New Brunswick mine just a few weeks ago. Global oversupply will continue to weigh on potash prices and make life difficult for producers of the key nutrient.

I am advising a hand-to-mouth approach on potash for spring at present and am holding off on booking spring phosphate until the market shows a clear sign of a low. There will be some areas that do not have enough phosphate on hand to cover demand and prices will firm there as growers book tonnage. My advice on phosphate is to keep in touch with your preferred supplier and make sure there is enough phosphate to go around in your area. If spring demand does support higher phosphate prices we expect that condition to be temporary, and for phosphate to fall through the summer months.

By the Pound --

DAP is priced at 50 1/2 cents/lbP2O5; MAP at 46 1/2 cents/lbP2O5; Potash is at 30 1/2 cents/lbK2O.

The following is an updated table of P&K pricing by the pound as reported to your Inputs Monitor for the week ended February 26, 2016.

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