Farmer Fertilizer Focus - Phosphates

By: Josh Linville, Vice President- Fertilizer

Wed, 31 Aug 2022, 00:41

September '22 PHOSPHATES

Josh Linville

Vice President - Fertilizer

Major global phosphate export location price graphs

This is something new that I'm going to start adding to this newsletter. I will have 2 graphs: one that lists historical pricing in short tons and one in metric tons so that everyone can read it in a form they prefer. All prices are listed in USD. All prices are FOB or priced at their origin.

I will say this now and will say it going forward to eternity: these are the flat price graphs for each individual location. Your price where you are is going to be different. There are logistics. There is the cost of storage/interest/insurance/etc. These graphs should not be taken as "it shows the price at $700, why isn't my price $700". These graphs should be used to give an appreciation for price movements thru 2022.

What everyone wants to know first, what do we think will happen going forward

With the exception of a slight price increase in NOLA DAP values in the last week, the continued global price trend has been lower in the past month.

Further to that point, we continue to see North American production as some of the highest cost production in the world. The September Tampa NH3 price did not go up nearly as much as expected and sulfur prices are expected to be slashed for Q4 '22. That means the cost of production largely remains flat to expected lower.

A lower cost of production DOES NOT equate to a guaranteed drop in price. However, it does mean that if the market pushes back hard enough (i.e. doesn't buy or apply this fall), values can fall further.

I think phosphate is going to struggle to show a lot of strength in the near term. Especially if demand smells blood in the water (which I think does). There is global demand coming but I'm not sure it will be enough to offset overall demand destruction and application delays.

What I'm saying in a way too long way is that we could see a small price pop in the short term but ultimately, it seems that prices are going to remain under pressure.

Should you buy your fall '22/spring '23 phosphate needs?

November is coming up fast. If you are a fall application farmer, are far away from production sites and the numbers work, time to start making a hard consideration to lock up fall needs.

THIS IS NOT A ONE SIZE FITS ALL ANSWER.

Let me repeat that

THIS IS NOT A ONE SIZE FITS ALL ANSWER.

Yes, I know the above was a repeat from August. It was a long day at the Farm Progress Show. I'm tired. Leave me alone!!!

Seriously, this comes down to your operation. If you reside in the heart of the cornbelt and your 2023 financials are showing overall profits, it likely makes sense to lock up your needs and get ready to pour coals to the fire and produce every bushel you can next year. I personally wouldn't want to risk everything in today's environment trying to get just a little more.

However, if you farm in "fringe" acre regions, it may not make sense...right now. If you are looking at your numbers for next year and are questioning what to do, it makes sense to wait this thing out. See if grain prices rally further. See if phosphate values drop further.

Either way, TALK TO YOUR RETAILER. They are watching this market just like we are and they do not want to get hung with high priced product. A lot of retailers survived thru 2008 and 2012 and have swore never again. You cannot expect that product to be in the shed just waiting for you to show up on November 1. If you are going to roll this fall, talk to them. If you are going to wait until winter/spring, talk to them. I know many of you may see them as your adversary. In some cases, that may be but the majority that I work with want what is best for their customers because a healthy customer continues to buy from them.

What has happened in the last 30 days?

Global prices have continued to slide, but where is the end?

While the last month has not exactly been a freefall of global phosphate pricing, the trend has definitely been negative. From my perspective, I think there are a couple factors that are playing into this:

Concerns that demand destruction is bigger than expected
Normalizing tighter than typical global supplies.

Talk to almost anyone in the marketplace and they will admit that they expect phosphate application rates to be down thru the fertilizer year 2023 cycle. The only real question is by how much. Some believe we will only see single digit percentages from normal (almost non-event). Others, such as ourselves, continue to expect to see 10 - 15%...or more, as farmers cut back rates and pull phosphate from the soil in an attempt to boost profits and cut spending.

The second point is sort of hard to describe. When a market suddenly tightens up on typical inventories, there is a freak out period where prices skyrocket in response. That is what we saw happening. Demand went thru the roof when grain prices shot higher. China cut their exports and as the number 1 exporter in the world (using 2021 data), that made a big difference. Russia started capping exports. There were a lot of "scary" things happening and prices responded.

Today, several of those events are still in play but we are getting used to them. They are no longer ridiculous events. They are just part of our world and we are calming down to them.

This does not mean that prices cannot climb again. Quite the opposite. With low inventories, any new event will be felt more violently than previous years.

This just means we need to keep our heads on a swivel.

North American producers caught a break

Last month, I showed this picture detailing our perceived cost of producing one ton of DAP in a NOLA barge:

The point was to show that while margins were still healthy, there was not hundreds of dollars of downside price risk from current markets. If the market dropped $200, producers such as Mosaic would simply shut down production. They are in this business to make money and are sitting on finite phosphate reserves.

With everything happening in the global nitrogen marketplace, I fully expected to see the Tampa NH3 price raise enormously from August. With it being a sizeable chunk of the cost of production, I was fully prepared to write this and talk about how the cost of production was likely decently above $600 now.

Well, that was not the case. The Tampa NH3 price was only raised by $50. Further, while it will not be felt in September, we expect to see the price of sulfur slashed for the 4th quarter. That should mean, if everything plays out as expected (how many times have I said that and been wrong?), the cost of production should drop decently by October 1.

Now, let me reiterate. This does not mean prices will fall to cost of production. We (N.A.) are still part of the world marketplace. If the N.A. market does not want to buy these tons, there might be export opportunities. With no export restrictions in place, tons can flow freely to rebalance the N.A. S&D.

This just means that under the right circumstances (global demand dries up, fall demand is poor, inventories are bursting at the seams), the price CAN fall further before forcing producers to decide to shut off production.

Biggest question: what is coming this fall?

At least that is my current biggest question.

As mentioned before, we already anticipate phosphate demand being lower than normal. We are currently estimating between 10 - 15% lower than normal. That is just the overall number and we think that will vary depending on where the farmer is.

The bigger question is what will the fall/spring split look like. Will we see farmers approach this fall normally and not care about the chance of prices continuing to fall thru the winter to provide cheaper options in the spring? Will farmers be angry at the continued high price and opt to wait? Will it matter due to mother nature not allowing any progress be made?

While the overall demand destruction is important, the fall/spring split is more so. If enough drag their feet to spring, we will see prices down thru some winter months. However, that will cause a huge demand surge in the spring that the market may struggle with. The results could be higher cost from higher logistics as well as late deliveries.

If I had the answer to this question, I would be much richer!

Still no change on the U.S counter vailing duty against Russia/Morocco

In past editions, I have mentioned that even if the CVD was reversed, it would likely make little difference as NOLA values were some of the cheapest in the world. Now, with global prices dropping and demand sluggish, it might make a difference.

Unfortunately, we have still not heard any further news in regards to a reversal. Hope spiked that there would be following CF's loss on their UAN duty case. News may still come. It just hasn't been heard as of this writing.

Obviously I'll send an update if we do hear.

Last minute addition: India purchases 500Kmt at $820

This happened on September 1 but I thought it was worth adding in here before I sent it out to everyone.

It was reported that India had purchased 500,000mt of phosphate at a delivered price of $820. This is yet another step LOWER in global phosphate price ideas and continues to prove that the global trend is definitely lower.

This trend will not be lower forever. Chinese exports remain very sluggish as the government restricts exports. N.A. production costs remain very high for September (likely to drop in October as lower sulfur prices get added to the equation). Demand, while likely lower than normal due to high price, is about to come in big waves.

Also keep in mind where you are and what the date on the calendar is. For our operation, international tons are almost to the point that they no longer matter. It would take most of a month to get a ship from most exporting countries. Then that product needs to be offloaded, reloaded on barges, moved up the river system, put thru a terminal and shipped via truck to our local retailer. You start to see where time is running out...

However, if global values continue to fall, that will weigh on price ideas...

Last minute addition 2.0: Pakistan demand may be way down

Many might be asking themselves "why is Josh talking about Pakistan phosphate demand?". As the number 8 DAP/MAP importer in the world, they matter. They very much matter.

Pakistan has been dealing with tremendous flooding which has a lot of questions popping up in regards to their demand this fall. We have heard that they have lost 2M acres of crops due to this flooding. Adding fuel to the fire is that they typically import their phosphate needs in September/October/November. You might be saying to yourself that we just started September so we have all 3 months in front of us. The flip side is this chart shows when product ARRIVES, not when it is purchased. Product needs to be purchased ahead of time to arrive in this window. There is still time but their absence has been notable.

Again, this is just another indicator of global price trends being justified. We need to keep watch because if they return to buy, it could be in a very big way.

Where are current values in relation to the past

NOLA/New Orleans, Louisiana DAP price comparison

Vs 30 days ago - flat
Vs 90 days ago - -7% or approximately $60 lower
Vs 6 months ago - -16% or approximately $145 lower
Vs 1 year ago - +16% or approximately $105 higher

Morocco DAP price comparison

Vs 30 days ago - -1% or approximately $10 lower
Vs 90 days ago - -20% or approximately $230 lower
Vs 6 months ago - +3% or approximately $32 higher
Vs 1 year ago - +41% or approximately $270 higher

Black Sea DAP price comparison

Vs 30 days ago - +3% or approximately $25 higher
Vs 90 days ago - flat
Vs 6 months ago - -2% or approximately $17 lower
Vs 1 year ago -+45% or approximately $263 higher

China DAP price comparison

Vs 30 days ago - -7% or approximately $65 lower
Vs 90 days ago - -14% or approximately $140 lower
Vs 6 months ago - -5% or approximately $45 lower
Vs 1 year ago - +34% or approximately $218 higher

Saudi Arabia DAP price comparison

Vs 30 days ago - -2% or approximately $17 lower
Vs 90 days ago - -15% or approximately $160 lower
Vs 6 months ago - -3% or approximately $30 lower
Vs 1 year ago - +35% or approximately $228 higher

Bull/Bear Factors

Because no market is ever guaranteed to go higher/lower, we try to consider the factors that can sway values so that we are able to act when they occur rather than react.

Bullish Factors

U.S. cost of production very high – could it have been higher if the Tampa NH3 price had gone up as much as expected? Yes. Still, it will be very high compared to "normal" over the last several years. There just isn't as much downside price risk as some hope for.
China keeping a lid on exports – the number 1 exporter in the world is currently capping export flows with little end in sight. That removes a lot of product from the world.
Demand is waking up – July/August is typically a very slow time for fertilizer demand around the world. That said, we are about to come out of the seasonal slumber...and it is looking at very good grain values in 2023. At home, we are eying a Dec '23 corn price that has been floating in the $6.15 - $6.25 range. We may not love the high price of phosphate but we certainly want to raise every bushel we can.

Bearish Factors

Fall season demand could be a huge disappointment – farmers can cut their application rate by more than expected. Farmers may delay their application to winter or spring. Farmers may have little to say in the approach if mother nature repeats what happened this spring in North America (no chance to get tractors in fields).
China can export again – if you are saying "that doesn't seem likely today", I would agree with you. However, the chance is not zero so we continue to watch. Combine lackluster demand with the return of the biggest exporter and we would be looking at solid price pressure to the downside.
Ag finds out it is not recession proof - we saw this in 2008. A lot in the market brushed off recession fears saying that we had to grow food so fertilizer prices were insulated. Then the sell off occurred. Do not think for a second that if grain prices start to crumble that phosphate values will not do the same.

Where are the current phosphate/grain ratio values today?

We believe that only looking at the flat price of either grains or fertilizer can be misleading:

Only selling grain can hurt you if fertilizer prices rise substantially
Only buying fertilizer can hurt you if grain prices fall

We look at the ratio "value" to get a better indication of where we are or how many bushels of X does it take to pay for 1 ton of fertilizer.

Would you rather:

Spend 120 bushels to pay for 1 ton of DAP
Spend 80 bushels to pay for 1 ton of DAP

When we compare the current ratio value against recent years, we start to see if we are high or low.

YOUR VALUES WILL LOOK DIFFERENT

This graph looks at the NOLA DAP price vs the flat grain price. There are no logistics on either product. Your location will look different due to fertilizer logistical costs, grain basis, etc.

Josh Linville’s Thoughts

Keep your entire operation in mind when buying for this crop year - yes, these are still some of the highest phosphate values that we have ever seen. When you look back thru history, we do not spend a lot of time at these types of values. Then again, same can be said for a lot of current grain values. I fully understand a lot of the anger in fertilizer prices being where they are. Each time grain prices go up, so do all inputs. Just remember that while you may be made at a single input like phosphate, the entire operation needs to be considered. If you cut phosphate and as a result, vastly lower your overall yield potential, you are money behind. That goes for any/all inputs. In today's day and age, it seems that maxing out yield is the path to greatest profit.
Make sure to keep talking to your supplier - at these values, you are nervous/scared to lock in the price and then see values plummet. If you are not at least a little worried about that scenario, are you even human?!!! Your retailer/coop/etc. is in the exact same boat...with a lot more tons. I'm not saying you need to share every intimate detail on what you are going to do. However, if we give them nothing, they may make the decision to not put a lot in place and go hand to mouth. If that happens, we will be having a whole new conversation in November....
Hedge, hedge, hedge - the worst mistake we can make is to buy current phosphate values and then watch the price plummet, right? Wrong. The worst mistake we can make is lock up current phosphate values, sell no forward grain and then watch the grain market fall apart. You are then stuck with insanely high priced fertilizer while selling crap grain values. I know there are delivery risks involved with selling forward which is why I never push to sell absolutely everything for the next year. However, some layers to protect what we have bought should be considered.

Fertilizers

This material should be construed as the solicitation of an account, order, and/or services and represents the opinions and viewpoints of the individual authors or presenters. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers.

The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. (“SGI”) disclaims any responsibility to update such views. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided.

References to certain OTC products or swaps are made on behalf of StoneX Markets, LLC (SXM), a member of the National Futures Association (NFA) and provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ and who have been accepted as customers of SXM.

StoneX Financial Inc. (SFI) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Advisor. StoneX Financial (Canada) Inc. (SFCI) is registered in Canada and is a member of CIRO and CIPF. References to certain securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to certain exchange-traded futures and options are made on behalf of the FCM Division of SFI. Wealth Management is offered through SA Stone Wealth Management Inc., member FINRA/SIPC, and SA Stone Investment Advisors Inc., an SEC-registered investment advisor, both wholly owned subsidiaries of SGI.

R.J. O’Brien & Associates, LLC (RJO) is registered with the CFTC as a Futures Commission Merchant and is a member of NFA.

StoneX Financial Ltd (SFL) is registered in England and Wales, company no. 5616586. SFL is authorized and regulated by the Financial Conduct Authority (FCA) (registration number FRN:446717) to provide services to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorized to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorized and regulated by the FCA under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorized by the FCA.

This communication is issued in the European Economic Area by StoneX Financial Europe GmbH (SFEG). StoneX is the trade name used by STONEX GROUP INC. and all its associated entities and subsidiaries. StoneX Financial Europe GmbH (“SFEG”) is a securities trading firm registered in Germany under Company No. HRB 80844.

StoneX Financial Pte Ltd (Co. Reg. No 201130598R) (“SFP”) is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licence holder (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payment Institution (for domestic and cross-border money transfer services).

SFP may distribute analysis/report produced by its respective foreign affiliates within the StoneX Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations Recipients should contact SFP at (65) 6309 1000 for any matters arising from, or in connection with, this webinar.

StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism.

StoneX Financial (HK) Limited (CE No.: BCQ152) (“SHK”) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Securities and Dealing in Futures Contracts.

StoneX Financial Pty Ltd (ACN 141 774 727) holds an Australian Financial Service License (AFSL: 345646) for Dealing in Securities, Exchange-Traded Derivatives Contracts, OTC Derivatives Contracts and Foreign Exchange Contracts, and is regulated by the Australian Securities and Investments Commission.

StoneX Securities Co., Ltd. (“SSJ”) (Co. Reg. No 010401047199) is regulated by the Japanese Financial Services Agency as a Type-I Financial Instruments Business Operator (Kanto Local Finance Bureau (FIBO)No.291’), is a member of the Financial Futures Association of Japan for dealing and broking FX and FX Option transactions, and is a member of the Japan Securities Dealers Association for dealing and broking stock indices and option transactions.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

The report/analysis herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Satellite view of Earth at night showing illuminated cities across Asia and the Middle East

Discover more insights

Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.

Explore subscriptions

Fertilizer's Spring Reckoning Now Runs Through the Strait of Hormuz

A cluster of positives has finally tilted the fertilizer market toward buyers, from China's return to normal urea exports to fresh Moroccan phosphate cargoes bound for the U.S. Yet the whole picture still hinges on one waterway, and a prolonged standoff around the Strait of Hormuz could unwind those gains before spring.

Editorial TeamTue, 04 Aug 2026, 18:36

Fertilizers

Fertilizer’s Hidden Chokepoints Stretch from Hormuz to the Nord Stream

Fertilizer supply now depends on a handful of contested shipping lanes and pipelines stretching from the Middle East to Northern Europe. Here is how the Strait of Hormuz, the Red Sea, Russia’s shadow fleet and the Nord Stream pipeline are reshaping where nitrogen, phosphate and potash actually move.

Editorial TeamThu, 30 Jul 2026, 05:47

Fertilizers

The PM Commstock Report

Afternoon Market Review Includes - The cattle industry enters a critical year, with markets facing seasonal pressures, climate impacts, and the echoes of historical trends.

Commstock InvestmentsFri, 24 Jul 2026, 19:38

Grains & Oilseeds
Energy
Renewable Fuels
Cocoa
Coffee
Cotton
Fertilizers
Meats & Livestock
Currencies

StoneX: We open markets

Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.

Reach

With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.

Transparency

As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.

Expertise

From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.