Fertilizer Market Report – March 13, 2024 

Hedge Fund Flows, Farmland Prices in Canada and US, Urea & MAP Updates

In this week’s fertilizer report: Highlights from Peak Trading Research hedge fund flows; farmland prices may have reached a turning point; a data-driven look at US farmland prices; North American urea and MAP prices; and industry tidbits.

News of the Week: Fertilizer Market Report

Peak Trading Research Weekly Hedge Fund Flows

According to Peak Trading Research, speculators sold agriculture futures during the most recent Tuesday-Tuesday COT [Commitments of Traders] report window but then bought futures through the end of last week via the USDA’s lack of changes (no bearish export tweaks), drier near-term Brazil forecasts, and CTA [commodity trading advisor] technical buying.

Farmland Prices May Have Reached Turning Point

This article in The Western Producer discusses the potential turning point in farmland prices in Canada amidst current grain prices and squeezed margins, raising concerns about the sustainability of aggressive expansion in farming operations. It emphasizes the critical role of timing in land purchases, citing historical examples of how buying land at peak prices in the 1980s led to financial downfall for many farms. While recent years have seen remarkable increases in land prices, uncertainties loom due to factors like lower commodity prices, rising interest rates, tightening credit, and overextension among some producers. The interconnectedness of these factors suggests a possible correction in land prices, especially if grain prices continue to remain low.

The article highlights the delicate balance between wishing for lower land prices and the potential adverse effects on the agricultural sector, urging caution in navigating the complexities of land market dynamics.

Are Investors Increasingly Buying Farmland? A Data-Driven Look at Ownership Shifts in the US

While local buyers constitute approximately 70-80% of acreage purchasers in the Midwest, this doesn’t necessarily translate to a corresponding 20-30% transfer to non-local buyers.

An analysis conducted by CamoAg of transactions in the Midwest over the past four years reveals that although the majority of farmland is bought by local entities, a notable portion is also acquired by non-local actors. However, there hasn’t been a discernible surge in farmland acquisition by non-local entities during this period. The influence of investors on the market remains a topic of debate, but it’s clear that farmland continues to allure those seeking low-risk investments and a hedge against inflation. Nevertheless, if current trends persist, control over the vast majority of farmland in the United States will likely remain in local hands.

North America Urea Last Week

According to Green Markets, urea prices in Western Canada were flat WoW in a range of C$750-$765/mt DEL for the second week in a row.

NOLA urea prices increased to a range of US$367-$400/st from US$363-$398/st last week.

It appears that the market did not anticipate such an early start to spring seeding in the US, and therefore the urea supply continues to tighten pushing prices up.

North America Phosphate Last Week

According to Green Markets, the latest delivered MAP prices were flat WoW in Western Canada in a range of C$1,120-$1,130/mt for the fourth week in a row. MAP prices have risen 38% since early July 2023 in Western Canada.

MAP NOLA prices were up to a range of US$640-$650/st. up on the low end from the previous week’s US$625/st. We are hearing that MAP supply is very tight in North America. I would not wait to fill your bins with phosphate fertilizer this spring.

Again, supply is tight in North America in a US spring seeding that started early this year.

Industry Tidbits