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Fertilizer Market Report – July 31, 2024
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In this week’s fertilizer report:
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Good Demand Expected for Canada’s Two Biggest Crops
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The Consequences of Lower Interest Rates on Unpriced New Crop Grain
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North America Urea and Phosphate action Last Week
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Industry Tidbits
News of the Week: Fertilizer Market Report
Good Demand Expected for Canada’s Two Biggest Crops
“There should be good demand for Canada’s two biggest crops this year,” says economist Stephen Nicholson, global sector strategist of grains and oilseeds for Rabobank, said the U.S. hard red winter crop is big and getting larger as the weeks tick by.
On the surface that sounds like it would be bad news for Canada’s spring wheat growers, but he said big yields often correlate to low protein levels for U.S. HRWW. That means U.S. flour millers will need to buy some Canada Western Red Spring wheat for blending purposes.
The other big factor in the spring wheat market is struggling crops in Russia and Ukraine. It has been blazing hot in the Black Sea region and there was no relief in sight as of mid July.”
Good demand expected for Canada’s two biggest crops – AGCanada – AGCanada
The Consequence of Lower Interest Rates on Unpriced New Crop Grain
In an interesting article written by Philip Shaw, DTN Columnist, he lays out the thought process that the cost of storing grain could also be said for the cost of storing fertilizer from the fall until spring 2025.
“In 2024, we are not the same place on the farm that we were in 1981. However, interest rates have the same effect, and the cut in interest rates last week should help farmers who need to borrow money to enhance farm assets. It will also help on the grain front. It’s no secret that as the cost of interest rates rose during the last several months, the cost of carrying grain in storage increased as well. We were so bullish grains through that period, that it was easy not to notice. However, in this current bearish grain price environment, any break in interest rates represents a reduced cost of holding grain,” writes Shaw.
The key in that statement, of course, is about our current bearish grain price environment. This year there have been few opportunities to sell grain at higher prices except for maybe New Year’s Eve. Clearly, for unpriced new crop grain come this fall, there is a carrying cost to try to capture future opportunities ahead whether you own your own storage facilities or you pay elevator storage. Costs are costs. Despite the interest rate cut, there are interest costs associated within that no producer should disregard.
This year that puts us between a rock and a hard place. One caveat: I think it’s likely the Bank of Canada will keep reducing interest rates entering 2025. That should make it easier. However, it never feels that way. As we move ahead, there is just so much more to think about.”
The Consequence of Lower Interest Rates on Unpriced New Crop Grain (dtnpf.com)
North America Urea Last Week
According to Green Markets, urea prices in Western Canada were C$615/mt FOB and $640 delivered. The delivered price firmed up by C$10/mt on the low end WoW. Global urea prices continue to be directionless.
Last week, NOLA urea prices were up 5% on average to a range of US$305-$315/st from US$288-$302/st the previous week. This broke a three week streak of flat prices. NOLA prices essentially had to firm as NOLA was priced at a discount to Brazil therefore unable to attract import tons.
According to Direct Hedge, this week started with urea Nola spreads of US$310/st bid and US$320/st offer for August and US$315/st bid and US$320/st offer for September. Q4 is US$310/st bid and US$320/st offer.
North America Phosphate Last Week
According to Green Markets, the latest delivered Western Canada MAP price range increased to C$1,050 – $1,060 from C$1,040-$1040/mt the previous week. MAP supply is reportedly very tight in North America.
MAP NOLA fell slightly WoW to a range of US$635 – $645/st from US$645 – $650/st the previous week.
Industry Tidbits
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