India urea tender doesn t rattle U.S. market much Ammonia Urea UAN Phosphates Potash

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1 India urea tender doesn t rattle U.S. market much Retail fertilizer prices continue to have firm tone despite slow start to spring By Bryce Knorr, grain market analyst India stepped in to buy more urea last week, but the big tender didn t have legs here in the U.S. Still, while wholesale costs for fertilizer remain soft, retail prices rose nonetheless in some areas as dealers avoid restocking due to the uncertain demand and price outlook. Ammonia prices moved higher on average last week, despite overall weakness in the nitrogen market, as a few dealers reset offer sheets. Some charges eased, however, with much of the retail market on either side of $500. Our average is at $494, which seems $100 overvalued by historical trends given the April contract price at the Gulf of just $ So far, there are no indications that charge should move higher, which should give growers a shot a locking in lower prices this summer for fall applications. Urea tends to lead the nitrogen complex higher and lower, so the market was on high alert to find out if India s tender would shock prices out of the doldrums. So far, it hasn t. Overseas markets popped a little then gave back some of those modest gains as sellers scrambled to get rid of inventory they hadn t been able to move. Prices at the Gulf also tried to firm, but wound up $8.50 lower by the end of the week, settling around $219. That level translates to a fair retail replacement cost of $345, $10 below our average, which was down $6 to $ as retail slowly incorporates the larger downturn on the wholesale market. New offer sheets last week were both higher and lower, ranging from $325 to $360. Trading in swaps into August at the Gulf are another $15 to $20 lower, which could give more growers a shot at the bottom end of that range. UAN costs look like they ll be much cheaper by the middle of summer. But that won t do growers needing to book supplies now. Retail expense for 28% kept rising, reflecting earlier increases in a wholesale market that appears to have topped. Our average retail price gained $2.50 last week to $237, and could go higher because it s about $10 below current replacement cost. The value of 32% at the Gulf last week edged lower to $178.50, the second straight week of small losses following a $65 jump from fall lows. Phosphates were a pretty slow market for much of the past couple of years, but that changed over the winter with the upturn in the cost for the nitrogen component of compounds. Retail DAP price changes last week were both higher and lower on new offer sheets, which overall gained $1 on average to $484. Upside price pressure appears to exist, because the new prices were in the $480 to $510 range, even though replacement cost is around $475, though lower nitrogen costs pressured the Gulf price to $282.50, off 50 cents. Swaps into mid-summer show retail costs dropping another $15 to $20 to $450 or less. Potash saw its first suggestion of spring that prices may be peaking after a steady rise in Our retail average was down just 75 cents to just under $342, though offer sheets went both higher and lower. The increase on the retail side still hasn t matched the rally at the wholesale level that appears to be stabilizing. Our fair value of $350 comes with the Gulf cost steady at $239 and the Midwest terminal price at $272.

2 per short ton $900 $800 $700 $600 $500 $100 Ammonia vs Corn Gulf Ammonia Nearby Corn $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0 $ per bushel metric tons 600,000 AMMONIA IMPORTS/EXPORTS Exports Imports 500, , , , ,000 0 F-16 M-16 A-16 M-16 A-16 S-16 O-16 N-16 D-16 F-17 M-17 A-17 M-17 A-17 S-17 O-17 N-17 D-17 J-18 F-18

3 450, , , , , , , ,000 50,000 0 U.S. Ammonia Stocks year end, metric tons N 700, , , , , , ,000 0 Source: USGS U.S. Ammonia Exports metric tons N Source: USGS

4 $750 $650 $550 $450 $350 $250 $150 Ammonia Retail Gulf $900 Farmgate Ammonia April price $800 $700 per ton $600 $ $100 $- Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

5 $550 $500 $450 $350 $250 $150 Urea Retail Gulf $700 Farmgate Urea April price $600 $ per ton $100 $- Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

6 per metric ton Black Sea Urea Ave. $350 $330 $310 $290 $270 $250 $230 $210 $190 $170 $150 Jan Mar May Jul Sep Nov Average metric tons 1,400,000 UREA IMPORTS/EXPORTS Exports Imports 1,200,000 1,000, , , , ,000 0 F-16 M-16 A-16 M-16 A-16 S-16 O-16 N-16 D-16 F-17 M-17 A-17 M-17 A-17 S-17 O-17 N-17 D-17 J-18 F-18

7 $230 $220 $210 $190 $180 $170 $160 $150 Gulf Urea Swaps Curve 18 Apr 18 Jun 18 Aug 18 Oct 18 Dec 19 Feb

8 $365 UAN Retail 28% Gulf 32% $315 $265 $215 $165 $115 Farmgate UAN 28% April price per ton $450 $350 $250 $150 $100 $50 $ Source: Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

9 $185 $180 $175 $170 $165 $160 $155 $150 $145 $140 Gulf UAN (32%) Swaps Curve 18 Apr 18 May JLY Aug 18 Sep 18 Oct 18 Nov 18 Dec $280 $260 $240 $220 $180 $160 $140 $120 UAN Gulf Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

10 metric tons 450, , , , , , , ,000 50,000 0 UAN IMPORTS/EXPORTS Exports Imports F-16 M-16 A-16 M-16 A-16 S-16 O-16 N-16 D-16 F-17 M-17 A-17 M-17 A-17 S-17 O-17 N-17 D-17 J-18 F-18

11 $550 $500 $450 $350 $250 DAP Retail Gulf per ton $900 $800 $700 $600 $500 $100 $- Farmgate DAP April price Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

12 $385 Gulf DAP Swaps Curve $380 $375 $370 $365 $360 $355 $ Apr 18 May JLY Aug 18 Sep Tampa DAP metric ton Ave $420 $380 $360 $340 $320

13 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 U.S. Phosphate Rock Consumption metric tons

14 $560 $510 $460 $410 $360 $310 $260 $210 Retail Potash Midwest Terminal per ton $900 $800 $700 $600 $500 $100 $- Farmgate Potash April price Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

15 Midwest Potash $/st Average $ $ Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec POTASH IMPORTS/EXPORTS metric tons 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 0 Exports Imports F-16 M-16 A-16 M-16 A-16 S-16 O-16 N-16 D-16 F-17 M-17 A-17 M-17 A-17 S-17 O-17 N-17 D-17 J-18 F-18

16 U.S. Potash Consumption metric tons 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0