Inputs Market Update: Urea, Potash Still Bullish

Gains tallied $8.43 to Declines’ $13.33 in the regional averages.

Urea led us to the upside in this week’s price action, firming $5.80 by the short ton. We had expected strength to persist in both urea and potash and this week’s survey delivered just that. Anhydrous was just a nickel higher, UAN28% fell sharply and UAN32% held basically steady, much like it did last week. Evidently, UAN32% is not convinced urea can be a nitrogen price leader. That suggests UAN32% may front-run a segment-wide nitrogen recovery... something of a linchpin that has not yet been released.

One fact that is slipping under the holiday radar is that wholesale ammonia firmed in the week ending Dec. 23 by 25 bucks per ton. The higher ammonia price will lead to higher offseason prices, buttressing our advice to cover some nitrogen -- be it urea, UAN, NH3 or some combination of those. We will wait to fill the rest later in the winter, unless the market signals increased urgency to do so.

Potash continued higher firming $2.53 on the week. Vitamin K is still our lowest priced nutrient and while weekly gains have been confined to the 2-3 dollar area, potash continues to firm steadily. We may see price pressure on potash after the first of the year as exporters look to lure annual contracts from Chinese and Indian importers, but we believe the low is in for potash meaning you must get current on our advice to capture the best value potash has to offer for the 2017 crop.

We are also eyeing diesel very closely this week and checking with various sources for their opinion in this convoluted market. The fundamentals seem to be stacking up against lower prices and relief may take the entire winter to arrive. By then, spring fieldwork will have already begun and we may end up paying a demand-based premium per gallon in farm country. We want to

avoid that. For now, I would advise growers get in touch with their preferred farm diesel retailer and have a discussion about the wisdom of locking in some diesel for spring at current prices.

Corn Futures -- December 2017 corn futures closed Friday, December 16 at $3.76 putting expected new-crop revenue (eNCR) at $594.59 per acre -- softer $16.94 on the week. With our Nutrient Composite Index (NCI) at 493.70 this week, the eNCR/NCI spread narrowed 15.72 points and now stands at -100.89. This means one acre of expected new-crop revenue is priced at a 100.89 premium to our Nutrient Composite Index.

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