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.
All values are in metric tons and USD currency.
To me, phosphate is going to be the hardest purchase decision for farmers out there. Potash values dropped from their 2022 high's and never recovered, making it a somewhat easy purchase decision. Nitrogen is all over the place but values did correct and have presented plenty of opportunities. Not to mention the fact that if we are going to raise certain crops, you have to buy nitrogen.
Phosphate is on another level. Prices never dropped like the other majors did. Current ratio values are horrendous. Interest costs are thru the roof. How can you justify buying phosphate today with all the risk surrounding it? How can you not buy it if your soil/crop demands it.
Tough decision, right?
Your supplier/retailer is in the same chair...if not worse.
I'm not writing this to make you feel sorry for your retailer. They know their place in the game. However, take a step back and take a step into their shoes. How do you approach this fall?
- Interest costs is $4 - $5/month USD
- Farmers are saying they will cut back on application (lower demand)
- Current values are horrendous vs grain pricing
- Current inventory availability is extremely tight
- River systems are chock full of water (will barge traffic be impacted shortly)
- Farmers may opt to wait until winter/spring (how do we do a year's worth of application in one season)
The list goes on.
Again, I am not writing this to make you feel sorry for them or to make you feel like you have to do something today.
I am writing this because I think it is WELL worth a little bit of your time to have a conversation with them about your plans. That does not have to include passing a check over the desk. Just giving them some sort of plan of what you are thinking goes a long way. They can plan supply around that.
However, without that conversation, they may be a little timid on bringing in supply and that could hurt come season. I know the market has cried wolf SOO many times on the "if you do not buy it, you will not get it" storyline. In fact, if everyone waited, I'm guessing the market would make it work but eventually we are going to get burned.
Everyone needs to do what they think is best, but from my perspective, that visit will be huge.
What everyone wants to know first, what do we think will happen going forward
Global
So how do I start this section where I need to eat my words and change my outlook?
Phosphate looks like it should remain supported. Brazil and the U.S. have been in competition for tonnage. India needs to start buying. Chinese exports are back into question.
Do I like this POV? No.
Do I like writing this POV? No.
Do I have a choice? No.
With the way the world of phosphate is currently set up, it is hard to argue with the bulls. Inventories are suddenly feeling much more tight following reports that Chinese exports are slowing dramatically. They were one of our biggest saving graces. India has been struggling to purchase because of their subsidy program but I think that gets fixed soon and has them back to the table. Brazil and N.A. still has work to do.
Now, excuse me while I go take a shower...I feel dirty.
North America
If the world of phosphate is going higher, it is hard to see another POV for N.A.
With world values looking supported, so to should N.A. values. Likely that most parts of N.A. will continue to operate at a premium to the world due to import sanctions blocking a lot of the world from arriving. MAP, which is normally a $20 premium to DAP, is currently $100 higher and there are few signs of that improving.
We do have demand concerns as farm economics are much worse and should have buyers looking for ways to cut but today, those fears are much less than our fear of upside.
I sure hope this is one I have to later admit I was wrong on....
Chinese exports return to normal for April/May, June/July not looking good
A quick backstory.
China has historically been the largest global manufacturer and exporter of DAP/MAP and it really wasn't a close 2nd place. However, when global values skyrocketed in 2021/22 and inventories got extremely tight, the Chinese government started to intervene to slow/stop exports. The concept was to keep more than enough tons at home for Chinese farmers as well as keep domestic values low. Unfortunately, both concepts worked as expected...and now they really like the play.
Recently, global inventories have normalized for the most part and global values have corrected...but the government of China continues to keep their fingers on the market which has global impacts.
There was cause for excitement. April/May trade data showed that Chinese exports were improving back to what has been considered normal. The hope was that if their exports normalized and the rest of the major 5 countries were normal, so to would global values normalize. To an extent, they did...until they didn't.
Now, there is a growing conversation that Chinese exports have slowed significantly in June and may do the same in July. As a result, global values have been showing strength once again. Buyers had been sitting on the sidelines, hoping for prices to continue to fall but now with a little turnaround, they are stepping forward. As is usually the case, manufacturers have been more than happy to capitalize on the situation.
Just as quick as China removed themselves, they could return and impact global price ideas once again. It wouldn't be the first time and it almost certainly wouldn't be the last.
The biggest issue in my book on this whole thing is that is shows just how unreliable China is in terms of a global partner/supplier. Many of their decisions are being made at the government level so trying to figure out what they are going to do from a logical POV is a wasted effort.
As we have been doing, we continue to look at phosphate from a reactive rather than an active approach...
Solid global demand helping boost price ideas
One of the things that has shifted over the last few weeks is demand has returned. Now, some of that demand might be returning for fear of losing Chinese exports...which is fair. Some of that might have been just from the standpoint that one cannot wait forever.
There has been a battle brewing between Brazil and the U.S. for vessels. It is to be expected that NOLA values are significantly higher than the rest of the world. With import duties against 3 of the 5 largest global producers/exporters, U.S. import options are limited which creates tight inventories and bumped up values. While it doesn't happen constantly, it has become much more normal. What isn't expected is to see Brazil moving in kind. No such import duties exist for Brazil so global trade patterns remain normal...if not a bit better because of China/Russia/Morocco not being able to access the U.S. marketplace. Even still, Brazilian values have jumped to a premium with the U.S. and has created some competition.
Waiting in the wings is India. I'll save that story/outlook for the next section but effectively, they represent another buyer who should be coming soon.
All in all, global supplies have suffered due to Chinese exports being restricted and demand has climbed. That is a recipe that has resulted in a stronger than expected marketplace.
India struggling with need to purchase vs lack of subsidy support
The Indian fertilizer market operates a little differently than the rest of the world.
The government has a subsidy program in place that keeps domestic fertilizer prices low while also helping importers offset the high cost of purchases to bring in product. When it works, importers purchase fertilizer, bring it in, sell it to the system at a loss but make their money from the subsidy payment. It has worked for years...until it hasn't.
Earlier this year, the government (sensing weakness in the phosphate markets) slashed that subsidy rate. As a result, if importers were forced to bring in product, they would do so at a loss. It does not incentivize their purchasing, no doubt with the hope that if India (world's largest buyer) disappeared it would cause global values to plummet.
...the best laid plans...
The world has effectively moved on without them and put India in a tough spot. Domestic stockpiles are on the lower side. However, importers hands are tied with no changes to the subsidy. In fact, just recently one of the importers cancelled a 100K ton DAP purchase tender and literally stated it was due to inability to make money.
So what happens going forward?
One option is that the subsidy remains in place in the hopes that global values drop. With China removed, that does not look likely.
The other option is the government cries uncle and changes the program. In that case, there should be a surge of demand that very well may influence price ideas higher.
Either way, this will continue to be atop the heap of things I/we are watching for global phosphate.
N.A. summer fill values/programs keep prices high...going higher
A couple months ago, my outlook on the phosphate market was lower. The hope was that we would see NOLA DAP values dip to the lower $400's. Lower would have been better...but I didn't want to be greedy.
Unfortunately, it got to within about $100 of that and then started pressing higher.
The lowest market wide NOLA DAP price was around $520 - $530. Today, those same values sit near $550. MAP is worse. It typically resides at a $20 premium to DAP. Today, it is $100...
Unfortunately, a lot of the factors that I watch are showing more of a lean to bullish and not bearish. I want values to drop. I would LOVE for values to drop...but that is my emotion talking. Fundamentally, the bulls are winning today.
Now, it does seem as though there is little chance of a huge price surge. Everything has been a bit melodramatic and almost quiet in the last few weeks. It certainly helps tamp excitement when farmer economics are poor, interest rates are high, and grain prices continue to fall. Normally, those would be enough to be sitting in the bear camp...but inventories are simply too tight for that today.
Current phosphate/grain ratios very poor
No doubt most of you have been seeing what is happening in the grain space. Values have fallen from their previous higher ranges and the bad news continues to flow. While some across N.A. are focused on the acres lost from flooding, the market seems more focused on those same rains creating huge crops elsewhere.
At the same time that grain values and farmer economics are falling, phosphate values have been rising. Partly due to very tight inventories following a huge fall/spring cycle. Partly due to the loss of Chinese exports in June and likely July. Partly due to losing access to 3 of the largest exporting countries in the world (China/Russia/Morocco) due to U.S. counter vailing duty import tariffs.
This horrible combination have combined to create some of the worst grain/phosphate ratio values seen in the history of the markets (at least based on the information we have on hand). As I move thru these values, please keep in mind that this is using NOLA phosphate and board grain values. Your local values/ratios will look different based on basis.
Starting with DAP, when we look at all the weekly ratio values, the current market sits firmly in the top/worst 25%.
- NOLA DAP - $543
- December 2025 Corn - $4.57
- Current ratio - 118
Keep in mind that the DAP values has fallen slightly and corn values bounced just a little since Friday's report...it was 120 at the worst following the acreage report.
MAP is actually significantly worse. Historically, in the Gulf of Mexico, it sits as a $20 premium to DAP (give or take) but since the start of the import tariff's, that premium has skyrocketed and currently sits at nearly $100 over DAP.
- NOLA MAP - $645
- December 2025 Corn - $4.57
- Current ratio - 141
The initial reaction many have to this is "well, it is too high and demand destruction will take care of it". I fully agree. As we start looking ahead to Fertilizer Year 2025 (starts July 1), we have nitrogen and potash demand growing vs FY24...but phosphate falling. It isn't a huge percentage, but we do expect farmers to pull back where they can. However, the question is whether the demand destruction will be enough to offset the tight inventory situation...which I do not believe it will. Unless the world starts to get China exports back in a big way, the supply side is in control once again.
Now, for the whole purpose of this piece:
Hindsight 20/20, we should have been building soil levels last summer at the ratio low's
Make sure to highlight the "hindsight 20/20" part...
Last summer, the DAP ratio values dipped into the 80 - 90 range for a few weeks. Corn prices were very healthy and rising, phosphate values were falling and a huge opportunity presented itself. Farmers were spending less bushels of corn per ton of DAP than 75% of the time going back to 2018. Now, at the time, it looked like corn prices could continue to rally and phosphate could continue to fall, but the ratio didn't lie.
If we could see the future, and assuming we had ground that could hold phosphate, we would have increased our application rate last summer and then been able to reduce/skip our application this fall/spring when values skyrocketed.
If you are thinking "well, that only works in hindsight", not exactly. From my vantage point, and bear in mind I do not farm so I cannot say I'm putting this into practice (though I do advise my family to do this so there is that), that is how we should approach products like phosphate.
When the values dip below that bottom 25% line, that is the cheapest ratios seen. That means the farmer is keeping more bushels for every ton of DAP used. That is when we should be leaning into application/purchase rates, regardless of what either price is. When values are in the middle 50%, it's "ok" and up to the farmer discretion. When it gets above the top horizontal line, that is scale back territory.
I always try to say this: I fully realize that selling grain well ahead of time comes with its risks. That is something that needs to be discussed with your local folks. However, that is why some of these opportunities exist. Also keep in mind that locking in this portion is not a huge percentage of the overall crop.
These conversations are best had with your local retailer/elevator as those values are much more important. I look at these markets/values from a 50K foot level but what really matters is local to you.
NOLA/New Orleans, Louisiana DAP price comparison
Number 5 global exporter in 2022
Price comparisons
Vs 30 days ago - 5% or approximately $25 higher
Vs 90 days ago - -4% or approximately $25 lower
Vs 6 months ago - -6% or approximately $35 lower
Vs 1 year ago - 21% or approximately $95 higher
U.S. Midwest Average (using multiple points across Midwest) price comparison
Vs 30 days ago - unchanged vs last month
Vs 90 days ago - -8% or approximately $53 lower
Vs 6 months ago - -1% or approximately $7 lower
Vs 1 year ago - 12% or approximately $69 higher
U.S. Northern Plains Average price comparison
Vs 30 days ago - 1% or approximately $4 higher
Vs 90 days ago - -9% or approximately $64 lower
Vs 6 months ago - 1% or approximately $9 higher
Vs 1 year ago - 11% or approximately $63 higher
U.S. Southern Plains Average price comparison
Vs 30 days ago - unchanged vs last month
Vs 90 days ago - -10% or approximately $68 lower
Vs 6 months ago - -3% or approximately $21 lower
Vs 1 year ago - 8% or approximately $48 higher
Morocco DAP price comparison
Number 1 global exporter in 2022
Price comparisons:
Vs 30 days ago - 3% or approximately $18 higher
Vs 90 days ago - -5% or approximately $27 lower
Vs 6 months ago - -5% or approximately $28 lower
Vs 1 year ago - 15% or approximately $73 higher
Black Sea DAP price comparison
Number 3 exporter of DAP/MAP in 2022
Price comparisons:
Vs 30 days ago - 4% or approximately $20 higher
Vs 90 days ago - -3% or approximately $15 lower
Vs 6 months ago - -2% or approximately $13 lower
Vs 1 year ago - 15% or approximately $70 higher
India DAP price comparison
Number 1 global importer in 2022
Price comparisons:
Vs 30 days ago - unchanged vs last month
Vs 90 days ago - -9% or approximately $54 lower
Vs 6 months ago - -11% or approximately $67 lower
Vs 1 year ago - 16% or approximately $74 higher
China DAP price comparison
Number 2 global exporter in 2022
Price comparisons:
Vs 30 days ago - 7% or approximately $38 higher
Vs 90 days ago - -6% or approximately $33 lower
Vs 6 months ago - -7% or approximately $41 lower
Vs 1 year ago - 20% or approximately $90 higher
Saudi Arabia DAP price comparison
Number 4 global exporter in 2022
Price comparisons:
Vs 30 days ago - 2% or approximately $13 higher
Vs 90 days ago - -13% or approximately $81 lower
Vs 6 months ago - -9% or approximately $55 lower
Vs 1 year ago - 20% or approximately $91 higher
Brazil DAP price comparison
Number 2 global importer in 2022
Price comparisons
Vs 30 days ago - 9% or approximately $53 higher
Vs 90 days ago - 9% or approximately $50 higher
Vs 6 months ago - 10% or approximately $58 higher
Vs 1 year ago - 44% or approximately $188 higher
- China has pulled back on exports – this is easily the biggest bull factor out there, in my opinion. They have historically been the largest producer and exporter of DAP/MAP in the world. Their export slowdown has affected phosphate values around the world. As they unexpectedly pulled back in June (after a couple very good months), the world saw values firm. If China continues to pull back on exports going forward, it will keep the world market firm.
- N.A. inventories still tight, import opportunities slim – North America is in a tough situation that doesn't appear to get better short term. We will be starting Fertilizer Year 2025 fairly low on inventories after a huge fall/spring cycle. That means we are in catch up mode. We also have little hope that import duty rates against China/Russia/Morocco will be lowered or done away with. That means relying on the rest of the world...which doesn't account for a lot of tons. Ultimately, suppliers still have the market cornered today.
- If demand comes in before additional supplies return – right now, there is a little bit of a standoff between suppliers and buyers. Retailers have taken layers, but have done so reluctantly. They know farmer economics are rough so demand will be shaky. They know interest rates are high. However, they also know that inventories are tight and they have to have product in place for the next run. That has helped values stay firm. If buyers come back in a bigger way in the next few weeks/months before suppliers feel the need to sell, it should just push price ideas higher.
- Poor grain ratios should have demand scaling back – while this will not be a huge percentage, we do see demand falling due to the high price of phosphate. We are getting a lot of feedback from the farmgate that the economics are poor to just straight up not working this year. Looking at a lot of the prices out there, this isn't a surprise. I do expect to see a decent fall run, but I think a lot of farmers will look to see if they can reduce their application rate by a little bit. I also expect to see farmers looking at delaying their application until winter/spring. If the demand swing is large enough, it could put some pressure on the market.
- China can resume exports in a hurry – we have seen it before. China can go from all to nothing to all once again in nothing flat. The biggest problem is that we never know. Right now, the world is reeling from their export slow down. If later July/August we started to see them return, perhaps that could cause global values to fall.
- If sellers get nervous on lower demand, falling grain prices – right now, this doesn't feel likely but it is possible. Grain prices are falling and despite the fact that tight inventory stories are winning against lower demand stories, sellers do realize the situation the market is in. If we suddenly see a distributor/supplier get nervous, they could start to liquidate their positions. If large enough, it could put pressure on the market. If others see this, they could join in on the sell off. Get a few doing this and suddenly, we could see the market lower. This doesn't look likely, but is certainly something to watch.
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 150 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 MAY 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.
- Chinese exports - EASILY number 1 on this list. Their return/removal from the export marketplace can and usually does cause the the market to turn bullish/bearish. Right now, they have mostly exited the export space and values are firm. If they return in a big way, we could see the market turn...if it is early enough.
- India purchasing patterns - India is the world's largest buyer and is in a bad spot. It sounds as though domestic stockpiles are lower than normal and current government subsidy programs are not allowing importers to bring in product. Eventually something has to give. Either global values fall so they can import or the government changes their program. My money is on the government changing. If India suddenly becomes a hot buyer, watch out.
- Looming demand/demand destruction - again, not a huge percentage move but sometimes small percentages cause big changes in the market. Farmers are likely going to be looking for places to cut inputs this year/next year. If looking at some of the worst relationships, phosphate should be at the very front of the line with a lot of space between it and the next in line.
StoneX Ratio Calculation
The ratio calculation is derived from Bloomberg historical grains values as well as fertilizer values from StoneX, NPKFAS, and Argus.
The calculation is simply dividing the fertilizer price by each grain price.
All data was sourced from StoneX unless otherwise noted.
