Fall fertilizer costs jump higher again Ammonia Urea UAN Phosphates Potash

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1 Fall fertilizer costs jump higher again Dealers pay more to buy new inventory for growers planning fall applications By Bryce Knorr, grain market analyst Fertilizer costs moved mostly higher last week, with some products up sharply as dealers buying new inventory faced bigtime sticker shock in wholesale markets. The latest urea tender from India as expected resulted in major price increases due to lack of Iranian supplies, sending shockwaves through the complex. Ammonia cost more last week on both retail and wholesale markets, even though a deluge of rain this week could slow harvest and fall applications. Drier and cooler weather into the end of October could turn the tide for fieldwork, but high nitrogen costs and unprofitable corn margins could keep some growers on the sidelines for now. While our retail average for ammonia was up around $2 a ton to $494, many growers can expect to pay at least $20 to $30 more. Wholesale values on the Plains and Corn Belt jumped $15 to nearly $40 higher as plants can hold back ammonia to make urea rather than sell it directly. Urea remains the bell cow for a bullish fertilizer market. Average retail prices were up $4.50 last as dealers replacing inventory confronted a global market that took another leap forward. The cost at the Gulf was up $16.50 to $316, an increase that flowed up river for suppliers hoping to get product into position. While our average price is at $392.50, dealers posting new offers last week were significantly higher, in the $410 to $440 range, closer to our projected replacement cost of $434 given current conditions. Swaps at the Gulf into December are another $10 higher as well. India was unable to buy Iranian urea at its big tender last week due to U.S. sanctions, which brought offers nearly $80 a metric ton higher than the last big purchase in August. UAN continues to generate limited demand seasonally as far as growers are concerned. But growers securing supplies from dealers replacing inventory can expect to pay sharply higher prices. Our average cost for 28% as up less than a dollar to $241. But replacements costs could be $55 or more higher than that based on what s happening on the wholesale market. Costs at the Gulf for 32% rose $10 to $ and swaps show mostly rising costs into spring. The U.S. continues to export more UAN, with shipments in August up 30% over levels from Phosphates showed more mixed signals last week as rising phosphate rock production is offset by higher costs for nitrogen and sulfur. Our average retail value for DAP was up $2 last week to $513, but the index at the Gulf weakened $2.50 to $ Current retail charges look fairly valued according to projected replacement costs, with questions remaining about whether growers will delay or cut back phosphate applications in light of poor margins. Swaps show slightly lower prices in December, reflecting that attitude. Potash chugged higher again last week in a market that s seen steady price increases since making a long-term bottom two years ago. Average retail costs were up $3.25 a ton to top $362 last week, with wholesale markets also firming. Corn Belt terminals are at, and most growers can expect to pay $50 to $100 above that depending on their market and distance from supplies. Summer imports into the U.S. were up more than 10% from last year, as suppliers expect good demand. For more information about national and international fertilizer markets, go to Fertecon.com.

2 Iowa Fertilizer Prices $850 $750 per ton $650 $550 $450 $350 $250 Jan 11 Jan 13 Jan 15 Jan 17 Source: USDA Ammonia Urea MAP Potash $1,200 Illinois Fertilizer Prices Ammonia DAP Potash Urea $1,000 per ton $800 $600 Sep 08 Sep 10 Sep 12 Sep 14 Sep 16 Sep 18 Source: USDA

3 per short ton $900 $800 $700 $600 $500 $100 Ammonia vs Corn Gulf Ammonia Nearby Corn $ $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 per bushel AMMONIA IMPORTS/EXPORTS metric tons 600, ,000 Exports Imports 400, , , ,000 0 F-16 S-16 O-16 N-16 D-16 F-17 S-17 O-17 N-17 D-17 F-18

4 $750 $650 $550 $450 $350 $250 $150 Ammonia Retail Gulf per ton $900 $800 $700 $600 $500 $100 $- Farmgate Ammonia April price Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

5 $550 $500 $450 $350 $250 $150 Urea Retail Gulf $700 Farmgate Urea April price $600 $ per ton $100 $- Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

6 per metric ton Black Sea Urea Ave. $350 $330 $310 $290 $270 $250 $230 $210 $190 $170 $150 Jan Mar May Jul Sep Nov Average UREA IMPORTS/EXPORTS metric tons 1,400,000 1,200,000 1,000, , , , ,000 Exports Imports 0 F-16 S-16 O-16 N-16 D-16 F-17 S-17 O-17 N-17 D-17 F-18

7 $340 Gulf Urea Swaps Curve $320 $280 $260 $240 $220 1 Oct 1 Nov 1 Dec 1 Jan 1 Feb 1 Mar 1 Apr 1 May

8 UAN $365 Retail 28% Gulf 32% $315 $265 $215 $165 $115 per ton $450 $350 $250 $150 $100 $50 $- Farmgate UAN 28% April price Source: Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

9 $225 Gulf UAN (32%) Swaps Curve $220 $215 $210 $ Oct 18 Nov 18 Dec 19 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun $280 $260 $240 $220 $180 $160 $140 $120 UAN Gulf Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

10 metric tons 450, , , , , , , ,000 50,000 0 UAN IMPORTS/EXPORTS Exports Imports F-16 S-16 O-16 N-16 D-16 F-17 S-17 O-17 N-17 D-17 F-18

11 $550 $500 $450 $350 $250 Retail DAP Gulf per ton $900 $800 $700 $600 $500 $100 $- Farmgate DAP April price Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

12 Gulf DAP Swaps Curve $440 $435 $430 $425 $420 $415 $410 $405 $ Oct 18 Dec Tampa DAP metric ton $460 $440 $420 $380 $360 $340 $ Ave

13 Potash $560 $510 $460 $410 $360 $310 $260 $210 Retail Midwest Terminal Farmgate Potash April price $900 $800 $700 $600 per ton $ $100 $- Source: USDA, Farm Futures NOTE: Fair Values are projections of what current farmgate cost of product should be, based on international wholesale price points.

14 Midwest Potash $/st $350 Average $ Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec POTASH IMPORTS/EXPORTS metric tons 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 Exports Imports 0 F-16 S-16 O-16 N-16 D-16 F-17 S-17 O-17 N-17 D-17 F-18