DTN Retail Fertilizer Trends

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) -- Retail fertilizer prices tracked by DTN for the third week of August 2016 show price declines accelerating in recent weeks. All eight major fertilizers headed lower compared to a month earlier and all but one fertilizer has seen significant price drops.

UAN28 is now 11% lower compared to the month previous; the liquid nitrogen fertilizer averaged $238 per ton. Potash, urea and UAN32 were all down 7%, with potash averaging $333/ton, urea $337/ton and UAN32 $285/ton.

Anhydrous is 6% less expensive compared to last month, and both MAP and 10-34-0 were down 5%. Anhydrous averaged $516/ton while MAP was at $471/ton and 10-34-0 was at $513/ton.

The only fertilizer without a significant move lower was DAP. The phosphorus fertilizer averaged $452/ton.

On a price per pound of nitrogen basis, urea averaged $0.37/lb.N, anhydrous $0.31/lb.N, UAN28 $0.43/lb.N and UAN32 $0.45/lb.N.

In a new report from Rabobank titled "Urea's 'New Normal,'" author Brenda Jiang, farm inputs analyst, wrote about China's efforts to build highly efficient and cost-competitive urea capacity, which is replacing marginal producers. Rabobank estimates that nearly 25% of Chinese urea capacity will be upgraded by 2020 and this cheaper product will secure the country's position in the global urea trade as well as put pressure on the world urea price.

China's urea production is structurally changing, Jiang wrote. Manufacturers are realizing cost reductions by putting facilities in areas with abundant coal or utilizing lower-grade, cheaper coal to produce urea.

"First, large-scale facilities are being developed in Inner Mongolia and Xinjiang, as production facilities are consolidating with large integrated coal-based chemical projects," Jiang wrote. "Second, thanks to improved coal gasification technology, facilities that have started operating in the past few years are able to use low-grade, cheaper coal to produce urea, thereby cutting costs."

Another reason for the changes in urea production in China is advances in urea production efficiency, due to improved manufacturing processes, facilities and technologies. Companies in 2015 are now able to produce ammonia (and thus urea) by using 40% less coal stocks, compared to a company in 2008, the report states.

Jiang wrote these changes will have an effect on the global urea market. China has placed a cap on growth, producing 81.5 million metric tons (mmt) of total urea capacity in the next five years. Rabobank estimates 21.5 mmt of new, low-cost capacities will replace old, high-cost capacities from 2014 to 2020.

"China's urea exports have accounted for 30% of global trade, while the country's export price remains at the low end of the global market," she wrote. "An improved cost structure enables China to export urea at consistently low prices, hence place a cap on a global price rebound."

DTN's survey of retail fertilizers show all are double-digits lower compared to a year earlier.

10-34-0 is now down 16%, UAN32 is 18% less expensive and both DAP and MAP are 20% lower. Both anhydrous and UAN28 are 23% less expensive, urea is 25% lower and potash is now 30% less expensive. After months of floating around 25% lower, this marks the first time potash has pushed 30% lower compared to a year prior.

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

Follow Russ Quinn on Twitter @RussQuinnDTN

(MZT/BAS)

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