Weekly Fertilizer Review
Lower acreage estimates drop ammonia prices
Published: Jan 9, 2014
It's a new year and there's plenty of change in the fertilizer market as buyers and sellers get serious about their plans. Most nutrient prices are headed higher, but costs are all over the board as dealers reset their sheets. The exception is ammonia, which appears to be in retreat on falling corn prices and planting intentions.
Ammonia plunged $35 a ton on wholesale markets at the end of the year, completing a $250 drop over the course of 2013. Wholesale prices ranged from $505 to $535 in the central Midwest, with fair value retail prices typically $50 to $100 above those levels. The cheapest updated retail offer sheets on the southwest Plains ranged from $480 to $535 though other dealers were around $580. USDA put the average price in Iowa this week at $630, down almost $40 from December, with the low end of the market at $595. That's close to the $585 value forecast by current fundamentals according to my pricing model. With corn trending lower the question now is whether to book supplies aggressively or wait for lower offers. Locking in at least some of your needs now makes sense, because the ammonia supply chain is one that's notorious for disruptions.
Urea prices are showing a big increase in volatility as 2014 begins. Prices jumped $20 at the Gulf earlier this week, with the swaps market this morning putting prices up another $35 a ton as the seasonal move higher is lasting longer than normal. Those increases come despite hesitant buying by India, which may defer purchases to March. Swaps suggest steady prices into spring, with June contracts down $37 from the spot month. Upriver prices are not showing any fresh increases yet, but the latest retail offer sheets are generally posting significant increases in January. Prices are up $20 to $50, though some dealers who hadn't adjusted offers recently are actually dropping them. Prices on the Plains this week