"Fertilizer prices have broken decisively higher for both spot...

"Fertilizer prices have broken decisively higher for both spot and fall purchases, thanks to rising
demand buoyed by expectations acres will increase for 2011 due to the big rally in wheat ... "

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Wheat Rally Sends Fertilizer Prices Higher
Weekly Fertilizer Review for August 9, 2010

Fertilizer prices have broken decisively higher for both spot and fall purchases, thanks to rising
demand buoyed by expectations acres will increase for 2011 due to the big rally in wheat. While
costs usually firm seasonally into the fall, initial attempts by sellers to raise prices mostly failed
in July. But that logjam burst quickly on news last week Russia was halting wheat exports.
Heres a rundown on the current market, along with Farm Futures farmgate projected prices and
forward contracts for early fall:

Ammonia: Prices are up $22.50 at the Gulf this week, to $345 a ton, in line with earlier
established contracts for August. But more increases could be forthcoming. Prices this week are
up $20 a ton out of the Black Sea, with some spot sales to the U.S reported as high as said to
be done as high as $372 a ton, almost $55 higher than last week. Given normal freight
charges, that means prices at the Gulf could rise to $425 a ton, 20 higher than current fall
forward contracts.
For farmers, this means fall prices under $500 will be very hard to come by. USDA put the
average price at almost $550 last week in Illinois, in a range of $515 to $600, in line with the
farmgate price projected by Farm Futures. Wholesale ammonia off one western pipeline was
quoted at $540 a ton, with other suppliers reported to be $20 lower.
While international prices for natural gas are rising, costs domestically remain under control
thanks to a slow hurricane season so far. Record production has supplies in storage building,
though less than the pace of last years record accumulation.

Urea: Prices for granular rose $13 at the Gulf this week to $292 a ton, amid strong demand out
of Europe. Prilled prices were steady at $253 out of the Black sea, but forward prices for fall are
running about $12 a ton higher. The big rally in wheat appears to have yanked the market of out
the doldrums; earlier it looked like prices might have peaked for the season.
USDA quoted prices in Illinois at $432.70, up $6.70 a ton, in a range of $375 to $480. Based on
wholesale prices the Farm Futures model puts fair value at around $410 for spot delivery, with
fall prices at $421.

DAP: Good demand is being bolstered by uncertainty over supplies due to the potential closure
of a Mosaic plant in Florida. Barges were reportedly being bought for around $450, headed out
to the hard red winter wheat belt, with the Gulf put at $452.50. Thats up $17.50 a ton. Fall
prices are also higher, to $467.50 a ton. That means product at the farmgate level easily could
be running $600 to $675 a ton.
USDA, however, quoted Illinois prices at just under $510 a ton, in a range from $485 to $540,
which could be a real bargain if available.

Potash: Prices appear to be holding steady. Producers with access to truckloads in the western
Corn Belt could get granular product for $380 to $385 a ton, with the Farm Futures farmgate
price at around $420.
However, USDA quoted prices in Illinois as still rather expensive, averaging $487.75, in a range
from $450 to $550.