DTN Retail Fertilizer Trends

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) -- Average retail fertilizer prices continued to slowly slip lower the second week of November 2015, according to retail fertilizer prices tracked by DTN. But that relief could be temporary as OSHA regulations and a landmark lawsuit ultimately may influence price and availability of fertilizers, the industry worries.

Prices for all but one of eight major fertilizers edged lower compared to a month earlier, but none were down significantly. One fertilizer, DAP, was unchanged from last month. The phosphate's average price was $547 per ton.

The remaining seven fertilizers show little movement from last month. MAP averaged $561 per ton, potash $426/ton, urea $405/ton, 10-34-0 $581/ton, anhydrous $631/ton, UAN28 $289/ton and UAN32 $332/ton.

On a price per pound of nitrogen, the average urea price was at $0.44/lb.N, anhydrous $0.38/lb.N, UAN28 $0.52/lb.N and UAN32 $0.52/lb.N.

Changing public policy in the fertilizer industry was a major presentation point during the 2015 Fertilizer Outlook and Technology Conference held last week in Jacksonville, Florida. The annual meeting is hosted by The Fertilizer Institute (TFI) and the Fertilizer Industry Round Table (FIRT).

Jean Payne, president of the Illinois Fertilizer and Chemical Association, told conference attendees that fertilizer retailers will face some major challenges by an upcoming change to OSHA regulations which retailers were exempt from for many years.

The change in process safety management (PSM) will subject fertilizer retailers who store anhydrous ammonia to more safety rules and regulations than in the past, beginning as soon as July. This change will come at a cost for retailers both in terms of additional paperwork and possible physical changes to their facilities. Some retailer may decide to get out of the anhydrous ammonia business altogether if costs are too high.

"In all my years in the industry, this may be the biggest regulatory change we have ever had to face," Payne said.

Payne showed a video during her presentation in which an Illinois retailer had just spent $100,000 to upgrade one of their facilities. The retailer said it will be "a handful" to upgrade all of their other fertilizer facilities. They are in business to be profitable and these additional costs will have to be passed on to the farmers who purchase fertilizer, he said.

Despite these possible issues, Payne said she was confident the fertilizer retail industry in Illinois will survive these regulatory changes.

"Yes, there is some additional paperwork and in some cases there could be facility changes but, overall, I think our retailers will take on this change like they do every other challenge in the business and meet it," Payne said.

Retailers also nervously await how the Des Moines Water Works lawsuit against upstream drainage districts is resolved. In another presentation, Bill Wolf president of The Andersons Plant Nutrient Group said the results of this lawsuit could have a major impact on those involved with the fertilizer industry.

"We really have a tiger by the tail here with this issue," Wolf said. "If the Water Works wins, this could be just the beginning of court action all across the country."

Wolf said his company, along with many shareholders, worked together in Ohio to get an Ohio nutrient management bill passed last year in response to the toxic algae bloom that shut down the water supply to Toledo from Lake Erie in the summer of 2014. While one might think a company like his would not want to be involved in prohibiting fertilizer application in certain situations, Wolf said it was important all involved in crop production work together on these issues.

"We can't just sit around and do nothing anymore," he said. "We got to be involved, and in this case we got a bill with some teeth to fine those who don't follow the (application) rules."

With retail fertilizer moving lower in recent months, only one fertilizer is now higher compared to a year earlier. 10-34-0 is 4% higher compared to last year.

The remaining seven nutrients are now lower compared to retail prices from a year ago. Both DAP and MAP are 6% less expensive while UAN32 is 10% lower and potash is 11% less expensive. Anhydrous is 12% lower, UAN28 is 14% less expensive and urea is 19% lower from a year previous.

DTN collects roughly 1,700 retail fertilizer bids from 310 retailer locations weekly. Not all fertilizer prices change each week. Prices are subject to change at any time.

DTN Pro Grains subscribers can find current retail fertilizer price in the DTN Fertilizer Index on the Fertilizer page under Farm Business.

Retail fertilizer charts dating back to November 2008 are available in the DTN fertilizer segment. The charts included cost of N/lb., DAP, MAP, potash, urea, 10-34-0, anhydrous, UAN28 and UAN32.

DTN's average of retail fertilizer prices from a month earlier ($ per ton):

Russ Quinn can be reached at russ.quinn@dtn.com

(MZT/AG)

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