Weekly Fertilizer Review

Ammonia prices surge higher

Published on: Apr 7, 2014

Price increases for ammonia continue to work through the supply chain as farmers try to get started planting corn, with unrest in Ukraine and uncertainty about how many acres farmers could plant this spring in the U.S. keeping the market unsettled. While USDA's March 31 report appeared to show total acres for all crops falling, Farm Futures survey indicated farmers wanted to increase plantings by more than 4% overall.

Ammonia prices posted another round of increases, with some retail outlets fully matching the $105 increase seen on wholesale markets over the last couple of weeks. In addition to higher expenses, questions remain about availability because the supply chain remains stretched by lack of rail capacity and a delayed start to the shipping season on northern stretches of the Mississippi River. With Midwest wholesale costs running from $605 to $660, average retail prices in Illinois last week topped $700, according to USDA's survey. Updated offer sheets on the Plains aren't quite that pricey, but they still range from $600 to almost $700, with some costs up $125 in just a couple of weeks. Those costs still haven't caught up with the wholesale market, suggesting more increases are possible, with fair value now topping $770. Uncertainty about supplies out of the Black Sea could be an issue. Russia is increasing costs dramatically for Ukraine, which shut urea plants to focus on ammonia and is trying to arrange imports of natural gas from Europe. While gas costs in Europe are down significantly, feedstocks are still twice as expensive as in the U.S.

Urea prices edged lower on international markets, though costs here in the U.S. haven't fallen as much as elsewhere. Indeed, while terminal prices are easing a little on the Mississippi River as traffic reopens, retail costs are steady to higher this week. Urea on the Plains is now quoted at $530 to $575, close to the range also seen in Illinois, where the average was just under $545, according to USDA. The current price at the Gulf, just under $400, suggests an average retail price of $525, with fundamental projections averaging around $15 lower than that. Swaps out of the Black Sea show only a modest break through summer, but contracts at the Gulf for August are $90 cheaper than the current index.

Download the complete report, including information on UAN, phosphates and potash, using the link below.

Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Advisor. He conducts Farm Futures exclusive surveys on acreage, production and farm management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key farm crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.

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