Now may be the time to purchase fertilizer

Mike Jubinville

Highlights

  • After months of steady decline, retail nitrogen fertilizers prices may have bottomed
  • World urea prices started to strengthen in October
  • It's unlikely the retail price for 46-0-0 will be cheaper than high in the C$300 range per tonne

Average retail prices for most nitrogen fertilizers have trended steadily lower through the summer into the fall season. However, urea prices have seen some bounce of late, upwards of $25 to $50 a tonne, though still well down from a year ago.

World urea prices started to strengthen in October as traders took positions on expected good demand from Turkey, Brazil, the United States and Europe.

That’s shifted urea prices at New Orleans, La. up US$25 to $30 per short ton in the past month. Prices previously hovered around US$180 per short ton, a level that is thought to incrementally violate variable cost of production (be a risk to disrupt supply). The price is now $215-ish today. This is the first time the price has not fallen on a month-to-month basis since the settlement for May deliveries.

The risk of notably higher prices for nitrogen fertilizer seems low... farmers may want to consider getting more aggressive now in securing 2017 nitrogen fertilizer.

Bottom reached

The outlook for world nitrogen prices in the coming weeks is broadly stable as market players, both buyers and sellers, believe a bottom has been reached and expect some degree of stabilization in the near-term.

The Canadian dollar that was $1.30 equal to US$1 two months ago is now $1.34.

Disruption of autumn application in Western Canada and incremental challenges associated with cash flow from those struggling with a wet and delayed conclusion to harvest exist. This should shift some would-be autumn demand across the Prairies to the spring season. The likelihood of 46-0-0 getting cheaper than high in the C$300 per metric tonne range, generic Prairies at the retail level seems low.

While the risk of notably higher prices for nitrogen fertilizer also seems low, if circumstances allow, farmers may want to consider getting more aggressive now in securing 2017 nitrogen fertilizer needs in this high $300 a tonne range.

Mike Jubinville of Pro Farmer Canada offers information on commodity markets and marketing strategies. Call
204-654-4290 or visit 
www.pfcanada.com to find out more about his services.

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