OMAHA (DTN) -- Some retail fertilizer prices are moving lower for the first time in 10 weeks, according to DTN's weekly survey for the third week of June. That's likely due to a seasonal shift as fertilizer demand lessens with the side-dressing application season concluding.
All eight of the major fertilizers edged lower in price compared to the previous month. Leading the way lower was urea and UAN32, which both slid 5%. Urea averaged $367/ton while UAN32 was at $305/ton.
The remaining six fertilizers were lower in price from last month but the move lower was fairly small. DAP averaged $469/ton, MAP $496/ton, potash $367/ton, 10-34-0 $555/ton, anhydrous $566/ton and UAN28 $266/ton
On a price per pound of nitrogen basis, the average urea price was at $0.40/lb.N, anhydrous $0.35/lb.N, UAN28 $0.48/lb.N and UAN32 $0.48/lb.N.
University of Illinois economist Gary Schnitkey took a close look at "Anhydrous Ammonia, Corn and Natural Gas Prices Over Time" in a post on farmdoc daily on June 14. In recent years, observers have questioned whether ammonia prices have decreased enough to reflect decreases in corn and natural gas prices.
"From 2014 to 2016, anhydrous ammonia prices appear high relative to historical relationships between ammonia, corn and natural gas prices," Schnitkey wrote.
Both corn prices and natural gas have an effect on anhydrous prices, he added. Natural gas is the primary input and a major cost in the production of anhydrous ammonia. From 1984 to 2000, natural gas prices did not move much. Then in 2000 prices increased until 2006. However, since 2006 natural gas prices have decreased 50% due to fracking.
Schnitkey concludes that anhydrous ammonia prices are correlated with corn and natural gas prices. Increases in both corn and natural gas prices tend to lead to higher anhydrous prices.
"This relationship has become more strained in recent years," he wrote. "Given historical relationships, anhydrous ammonia prices should have decreased more than they did given the decreases in corn and natural gas prices in 2014, 2015 and 2016."
Schnitkey wrote that two questions arise from this situation: Why did prices not decline more since 2014? And will anhydrous ammonia prices decrease in the coming year to catch up?
On the first question, he speculates a change in the regulatory environment -- or perhaps the fact agricultural input prices have a tendency to rise faster than fall -- may be keeping prices afloat. As for the second question, time will tell if ammonia prices continue to decrease in 2017. A large switch from corn to soybeans may help this situation, he said.
The entire report can be read at http://farmdocdaily.illinois.edu/….
DTN's exclusive retail fertilizer surveys show prices remain lower compared to a year earlier. All fertilizers are now double digits lower.
10-34-0 is 14% lower while MAP is 17% less expensive and both DAP and UAN32 are 18% lower. UAN28 is 19% lower and anhydrous is 20% less expensive from a year previous.
In addition, urea is 21% lower and potash is 27% less expensive.
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):
|June 15-19 2015||571||597||490||467|
|July 13-17 2015||569||593||488||470|
|Aug 10-14 2015||568||591||479||457|
|Sep 7-11 2015||563||580||467||433|
|Oct 5-9 2015||548||564||446||418|
|Nov 2-6 2015||546||560||430||405|
|Nov 30-Dec 4 2015||541||559||421||400|
|Dec 28-Jan 1 2016||494||531||398||383|
|Jan 25-29 2016||495||515||391||380|
|Feb 22-26 2016||477||492||373||371|
|Mar 21-25 2016||475||501||371||390|
|Apr 18-22 2016||477||502||366||388|
|May 16-20 2016||476||501||365||384|
|June 13-17 2016||469||496||359||367|
|June 15-19 2015||642||706||330||369|
|July 13-17 2015||639||691||323||359|
|Aug 10-14 2015||631||677||315||356|
|Sep 7-11 2015||594||656||301||346|
|Oct 5-9 2015||584||639||294||338|
|Nov 2-6 2015||583||633||291||332|
|Nov 30-Dec 4 2015||578||627||286||332|
|Dec 28-Jan 1 2016||570||590||273||317|
|Jan 25-29 2016||571||569||271||317|
|Feb 22-26 2016||566||536||260||309|
|Mar 21-25 2016||561||569||276||312|
|Apr 18-22 2016||561||588||274||322|
|May 16-20 2016||558||588||274||321|
|June 13-17 2016||555||566||266||305|
Russ Quinn can be reached at firstname.lastname@example.org
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