Central Florida: The absence of both supply and demand kept trading in the Central Florida market to a minimum last week.
Prices remained static, with Mosaic referenced at $435/st FOB for DAP and $455/st FOB for MAP. Some industry players speculated that current producer prices were not sustainable given recent declines at NOLA, while others argued that levels were unlikely to fall while tightness persisted in the market.
Producers were reported to be offering spot tons at Tampa only after domestic and international contract tons were supplied and export spot demand was met. DAP was “extremely limited,” while MAP was said to be essentially unavailable.
Rumors were reported of small-lot DAP sales for as low as $430/st FOB, but the transactions went unconfirmed. Truck-loaded product was expected to maintain its approximate $5/st premium over railed tons, and sources put the dealer price at around $445/st FOB.
Demand was hampered by ongoing delays in the corn harvest, and some industry observers expressed uncertainty about the potential for a November boost. Reduced farm incomes, the expectation of continued logistics difficulties, and persistent harvest delays could conspire to minimize the fall application season.
Prices on the Central Florida market were quoted in a range of $435-$440/st FOB, unchanged from the previous week. MAP was called $455-$460/st FOB.
U.S. Gulf: It was another slow week in NOLA as the market struggled to find an identity. Bears and bulls waged a battle of perception over the short-term direction of the market, and no winner had emerged by week’s end.
Prices were largely static, though a number of traders saw offers firming as the week wore on. Non-Chinese tons were claimed to be unavailable below the $415/st FOB level as of Oct. 23, while an offer of $402/st FOB for open-origin DAP was reportedly advanced through an online broker.
Possible explanations for the wide spread ran the gamut, from short sellers hoping to run prices into the ground, to supply tightness giving the market a soft bottom, to ongoing freight uncertainty. One thing industry players could agree on, however, was the chilling effect of the delayed corn harvest on the market. USDA estimated the corn harvest at only 31 percent complete nationally as of Oct. 19, significantly behind the 53 percent five-year average.
Wet weather was blamed for the harvest delays, but freight issues and low crop prices were also factors. Many grain shipments were “stranded” as competition between coal, oil, chemicals, and fertilizers caused logistics costs to spike. In addition, growers were seeing crop prices on the futures market slip to their lowest levels since 2010. With less buying power at their disposal relative to recent years, some sources said farmers were more likely to delay harvesting as long as possible to defer costs.
A number of industry players argued, however, that the low grain price would only delay end-users from fall purchasing, and not deter them. “People aren’t really looking (to buy fertilizer) until they can get everything out of the field,” one source said. “But the weather is forecast to be good through November, so I think things are going to pick up and warehouses will sell out.”
As for predictions of reduced corn acres in 2015, several sources said they still expect brisk fertilizer demand. “I’ve heard they’ll plant 88 million acres instead of 92 million acres, but so what?” asked one source. “The farmers are pulling 1.5-times the crops out of the fields that they normally do, so nutrients are much more depleted than usual. It doesn’t matter how many acres they plant next year, they’re going to have to fertilize.”
The market bears, by contra