Inputs Market Update: Urea, UAN32% Fall Slightly

Gains tallied $13.92 to Declines’ $1.41 in the regional averages.

DAP was our upside leader this week as UAN32% and urea each posted mild price softness. Since DAP and MAP have been overpriced for some time now, we had expected phosphates to trend sideways until the rest of the fertilizer segment firmed to comparable price points. But with UAN32% and urea down this week, the upside may have been overdone on the nitrogen side. In an interesting technical feature, urea failed to cross over the year-ago price peg in two of the last three weeks despite nudging up to that point to within as little as 21 cents. If we were looking at a futures chart, we would call that a failed test of resistance, and call it a win for the end user. Fertilizer price charts do not always obey the same rules as do futures, so the importance of the price softness right at the year-ago price point will have to show itself over the course of the next few weeks.

There is some technical precedent for urea price softness once a failed test of resistance at the year-ago price peg is confirmed. We will dig deeper into this later in the week, but if urea is going to level-off here, the rest of the nitrogen segment is likely to press up to similar price points, and level-off as well.

It does seem significant that DAP and MAP comprise our two biggest gainers on the week as nitrogen price strength hints at breaking down. Here again, time will tell if phosphate finds urea’s test of technical resistance a source of DAP/MAP price support. Meanwhile, anhydrous, UAN28% and potash all continued to grind higher, each one adding roughly $1.20 per short ton.

Both of the farm fuels in our weekly survey were flat this week with diesel unchanged at $2.01 and propane steady at $1.35. Diesel price strength was limited by declines in crude oil and heating oil, both of which dropped a leg lower recently, but both have since suggested they will continue sideways within a sub-$50 range for the time being. That sets diesel up for sideways trade as well, but we still hold onto our suspicions that seasonal demand for farm diesel will limit downside potential between now and spring.

Get current with our advice. You should be 100% filled on spring/summer fertilizers and 75% filled on farm diesel for spring fieldwork.

Corn Futures -- December 2017 corn futures closed Friday, March 17 at $3.89 putting expected new-crop revenue (eNCR) at $611.53 per acre -- firmer $5.08 on the week. With our Nutrient Composite Index (NCI) at 536.06 this week, the eNCR/NCI spread widened 2.77 points and now stands at -80.55. This means one acre of expected new-crop revenue is priced at a 80.55 premium to our Nutrient Composite Index.

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