Farmers Should Actively Pursue Surplus Fertilizer Weekly Fertilizer by ruf23140

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									Farmers Should Actively Pursue Surplus Fertilizer
Weekly Fertilizer Review for May 7, 2010

Summer is often the best time for producers with on-farm storage to stock up on fertilizer. But
finding deals this year could be difficult, so producers should begin talking to suppliers to find
out what excess inventory may be available.

Burned by historical volatility over the past two years, many dealers likely won’t have much on
hand. Indeed, there were already indications this week that some terminals are beginning to run
short. And forward contracts for summer and early fall appeared to support the notion that
prices are likely to be fairly firm, unless financial markets crash and burn.

Here’s a rundown on the current market, along with Farm Futures farmgate projected prices and
forward contracts for summer:

Ammonia: Ammonia prices drifted lower at the Gulf this week, with the market around $367.50
a ton. Quotes out of the Black Sea are also down to around $301.50. That puts the spot
farmgate price around $540 to $575 according to Farm Futures’ pricing model. USDA pegged
the average cost last week in Illinois $556.75, in a range from at $515 to $635, up $25.

Forward prices for July and August are lower at the Gulf, around $335, but that’s up sharply
from levels hit just a month ago. Those summer prices suggest a farmgate price around $545,
not much of a bargain.

Costs to produce domestic fertilizer in the U.S. remain cheap. Natural gas futures remained
below $4, with supplies in storage this week up more than expected, with the stocks at record
levels for early May.

Urea: Spot prices for urea softened this week, reaching their lowest level since last fall. The Gulf
was down $10 a ton to $274.50 and the Black Sea softened to $231.75. That translates into a
farmgate price of around $380, less than last’s week’s price in Illinois, according to USDA,
which put the average at $435 in a range from $395 to $470.

Forwards out of the Gulf for July/September are running $242.50, with those out of the Black
Sea steady at $227, suggesting $350 to $375 on the farm.

DAP: Phosphate prices eased a little this week on international markets, dropping around
$11.50 a ton to $410 at the Gulf. Forwards through August are a little lower, $387.50, but those
levels suggest farmgate DAP could be expensive for producers trying to buy ahead. The
summer price on wholesale markets indicates a farmgate price of $550, above the price quoted
last week by USDA in Illinois. The agency’s survey put the cost at $504, in a range from $475 to
$536.

Potash: Potash companies are trying to talk up the potential for prices to rise this summer on
firm demand, and there indeed were indications the market has bottomed. That suggests
farmers should be looking for excess supplies if the price is right. USDA put the price in Illinois
last week close to $495 in a range between $460 and $550, but supplies could be available for
much less, between $410 and $435 in some locations.
                             Black Sea Ammonia Prices & Seasonal Trend
                                       Blue line on left axis is 1998-2007 ave.
                                     Red/Green lines on right axis are 2008-2009
                                                 (per short (U.S.) ton)

                     $190                                                  400
                     $180                                                  350
                     $170                                                  300
                     $160                                                  250
                     $150
                                                                           200
                     $140
                     $130                                                  150
                     $120                                                  100
                     $110                                                  50
                     $100                                                  0
                            Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
                                              Source: Yarra, FERTECON

                                                 98-07         2010       2009




                                       Anhydrous ammonia, per ton
                     $900                                                                 $16
                     $800                                                                 $14   Natural gas $/mmbtu
                     $700                                                                 $12
   Anhydrous $/ton




                     $600
                                                                                          $10
                     $500
                                                                                          $8
                     $400
                                                                                          $6
                     $300
                     $200                                                                 $4

                     $100                                                                 $2
                       $-                                                                 $-
                            1/5/07          1/5/08              1/5/09           1/5/10

                                          Gulf           Black Sea       Natural gas



SOURCE: YARA, FERTECON
                                          Farmgate Ammonia
                                              April price
                  $800

                  $700                                                      $546
                  $600

                  $500
    per ton




                  $400

                  $300

                  $200

                  $100

                   $-




                                          Source: USDA, Farm Futures



                              Black Sea Urea 2004-2007 Ave.


                 $320
                 $300
per metric ton




                 $280
                                                                  Average
                 $260                                             2009

                 $240                                             2010

                 $220
                 $200
                        Jan   Mar   May   Jul   Sep   Nov
                  Farmgate Urea
                    April price
          $600

          $500                                $373

          $400

          $300
per ton




          $200

          $100

           $-




                 Source: USDA, Farm Futures




                 Farmgate DAP
                    April price
          $900
          $800
          $700
          $600                                $542
          $500
per ton




          $400
          $300
          $200
          $100
           $-




                 Source: USDA, Farm Futures
                       Farmgate Potash
                            April price
             $900
             $800
             $700
             $600
                                                                  $408
             $500
   per ton




             $400
             $300
             $200
             $100
              $-




                            Source: USDA, Farm Futures



Natural gas supplies at record highs after early start to build




SOURCE: US EAI
Weekly Natural Gas
                                                                                                            Price
                                                                                                            USD
                         Natural gas failed again to hold $4                                                MMBTU
                                                                                                            12
                         as supplies are at record levels for early May.
                                                                                                            11


                                                                                                            10

                                                                                                            9


                                                                                                            8


                                                                                                            7


                                                                                                            6


                                                                                                            5


                                                                                                            4


                                                                                                            3
                                                                                                            .123
J   J   A   S   O    N     D   J    F   M    A   M    J    J   A    S    O    N   D    J    F   M   A   M
Q2 08 Q3 2008       Q4 2008        Q1 2009       Q2 2009       Q3 2009       Q4 2009       Q1 2010 Q2 10

								
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