Unsettled fertilizer markets firm Phosphates and potash make noise in wake of nitrogen rally By Bryce Knorr, grain market analyst

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1 Unsettled fertilizer markets firm Phosphates and potash make noise in wake of nitrogen rally By Bryce Knorr, grain market analyst I ve been pushing growers to lock in fertilizer costs if they can find products at fair prices. The nitrogen train may have already left the station and now phosphates and potash are starting to rumble as September trading winds down. Ammonia lagged behind when urea rallied but is starting to catch up, with higher costs noted on some world markets. Retail prices here in the U.S. are also rising as dealers reset price sheets after the $22.50 turn higher at the Gulf for September contracts. Average retail prices are up $3 this week to $ but dealers raising offers are adding $30 to their charges. That s taken costs up to the $360 level on parts of the Plains, with Midwest dealers typically higher. Fair retail value on average is around, but likely to go higher next month. Urea was calm for a time after the summer price increase, but that mood didn t last. Prices shot up some $25 at the Gulf in one day alone after the market heard talk of a new tender from India. Prices in that deal could be $35 higher than one done just a few weeks before. October swaps at the Gulf settled Tuesday at $240, which translates into a retail charge of $365. Our retail average is still below, a price that won t pencil out because Midwest terminals jumped to $275 last week. Dealers on the southwest Plains raised offers to a range of $275 to $315 last week, and some Midwest dealers are already at $375. UAN hasn t shown much of a reaction to all the moves in the rest of the nitrogen complex. Retail prices are flat, with the average cost of 28% stuck at $208 this week. That tone should change soon. September swaps for 32% at the Gulf have held steady above $120, October is set for a jump to $150, with November-March another $5 to $10 higher. That could take retail prices back up to $240 or higher. Phosphates have been a phlat market, with little change on the retail side since March. Wholesale costs for DAP at the Gulf were also little changed. But some production in central Florida was lost due to Hurricane Irma, raising Tampa export prices and firming the tone elsewhere. U.S. prices are below the world market, which could also lead to higher prices. Our average retail price of $425 continues to look reasonable, based costs into October and November. Potash was another flat market as fall began at both the wholesale and retail level. Our average retail price remains around $320, $20 higher than fair value though few offer sheets have changed recently. Midwest terminal prices edged $1 higher last week to $255, a price that s unlikely to get a lot cheaper. Canada doesn t have a lot to sell right now and some more mines there will be closed into winter, keeping the pipeline tight.

2 Iowa Fertilizer Prices per ton $850 $750 $650 $550 $450 $350 $250 Jan 11 Jan 13 Jan 15 Jan 17 Source: USDA Ammonia Urea MAP Potash $1,200 Illinois Fertilizer Prices Ammonia DAP Potash Urea $1,000 per ton Sep 08 Sep 10 Sep 12 Sep 14 Sep 16 Source: USDA

3 per short ton $900 $700 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 $0.00 per bushel 500,000 U.S. Ammonia Stocks year end, metric tons N 400, , , ,000 0 Source: USGS

4 U.S. Ammonia Inventories vs Price million short tons $900 $700 $0 Apr/04 Nov/04 Jun/05 Jan/06 Aug/06 Mar/07 Oct/07 May/08 Dec/08 Jul/09 Feb/10 Sep/10 Apr/11 Nov/11 Jun/12 Jan/13 Aug/13 Mar/14 Oct/14 May/15 Dec/15 Jul/16 Feb/17 Inventory Gulf Price $750 $650 $550 $450 $350 $250 $150 Ammonia Retail Gulf

5 $900 Farmgate Ammonia April price $700 per ton $- Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points. Midwest/S. Plains are based off supply and demand factors.

6 $550 $450 $350 $250 $150 Urea Retail Gulf million short tons U.S. Urea Inventories vs Price Inventory Gulf Price Jan/02 Nov/02 Sep/03 Jul/04 May/05 Mar/06 Jan/07 Nov/07 Sep/08 Jul/09 May/10 Mar/11 Jan/12 Nov/12 Sep/13 Jul/14 May/15 Mar/16 Jan/17 $700 $0

7 Gulf Urea Swaps Curve $250 $240 $230 $220 $210 $190 $180 $170 $160 $ Sep 17 Dec 18 Mar 18 Jun 18 Sep 18 Dec 19 Mar 19 Jun 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

8 $700 Farmgate Urea April price per ton $- Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points. Fundamentals are projections made off current supply and demand factors.

9 UAN Retail 28% Gulf 32% $365 $315 $265 $215 $165 $115 U.S. UAN Inventories vs Price Inventory Gulf Price $0 Apr/04 Jan/05 Oct/05 Jul/06 Apr/07 Jan/08 Oct/08 Jul/09 Apr/10 Jan/11 Oct/11 Jul/12 Apr/13 Jan/14 Oct/14 Jul/15 Apr/16 Jan/17 million short tons

10 $165 $160 $155 $150 $145 $140 $135 $130 $125 $120 $115 Gulf UAN (32%) Swaps Curve 17 Sep 17 Oct 17 Nov 17 Dec 18 Jan 18 Feb 18 Mar $280 $260 $240 $220 $180 $160 $140 $120 UAN Gulf Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

11 Farmgate UAN 28% April price $450 $350 per ton $250 $ $50 $- Source: Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points. Fundamentals are projections made off current supply and demand factors.

12 $550 $450 $350 $250 DAP Retail Gulf million metric tons U.S. MAP/DAP Inventories vs Price Inventory Gulf DAP Price Apr/05 Nov/05 Jun/06 Jan/07 Aug/07 Mar/08 Oct/08 May/09 Dec/09 Jul/10 Feb/11 Sep/11 Apr/12 Nov/12 Jun/13 Jan/14 Aug/14 Mar/15 Oct/15 May/16 Dec/16 Jul/17 $1,200 $1,000 $0

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 $335 $330 $325 $320 $315 $310 $305 $295 $290 $285 $280 Gulf DAP Swaps Curve 17 Sep 17 Oct 17 Nov 17 Dec 18 Jan 18 Feb 18 Mar

14 Tampa DAP metric ton Ave $480 $460 $440 $420 $380 $360 $340 $320 per ton $900 $700 $- 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. Fundamentals are projections made off current supply and demand factors.

15 $560 $510 $460 $410 $360 $310 $260 $210 Retail Potash Midwest Terminal million metric tons North American Potash Inventories vs Price Inventory Midwest Price Jan/00 Nov/00 Sep/01 Jul/02 May/03 Mar/04 Jan/05 Nov/05 Sep/06 Jul/07 May/08 Mar/09 Jan/10 Nov/10 Sep/11 Jul/12 May/13 Mar/14 Jan/15 Nov/15 Sep/16 Jul/17 $1,000 $0

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, Midwest Potash $/st Average $ $ $ Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

17 per ton $900 $700 $- 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. Fundamentals are projections made off current supply and demand factors.