Resurgent US fertilizer prices could face headwinds from mounting pressure on crop prices driven by ongoing trade hostilities with China.
Trade war fears helped send soybean futures to multi-year lows today, continuing a downward trek over the past three weeks amid frayed relations with the three largest export markets for US agricultural commodities: China, Canada and Mexico.
President Trump today further escalated the trade fight with China by threatening to impose tariffs on an additional $200bn worth of Chinese goods, causing front month soybean futures to plummet to a 10-year low of $8.41/bushel at midday before late-session bargain buying lifted the contract up by 48¢/bushel to close at $8.89/bushel, the lowest since March 2016.
Over the past three weeks, front month corn and soybean futures contracts have fallen by 13pc and 15pc, respectively. Front month soybean prices have dropped by 4pc since 15 June, when the US announced tariffs on $50bn worth of Chinese goods. A move that was subsequently met by retaliatory tariffs on US goods by the Chinese.
The volatile grain market environment has begun to stoke concerns among fertilizer market participants about its potential impact on nutrient prices for the fall.
While grain prices have sharply declined, the US fertilizer market has been on an upswing as the planting season wraps up, supported by fundamentally balanced-to-short supplies. Urea, phosphate and potash prices at Nola have all posted double digits gains over the last three weeks.
Phosphate prices have been particularly strong because of tight supply, with DAP Nola trading as high as $405/st fob last week, the highest level since November 2015.
But fertilizer wholesalers told Argus that the current grain market volatility could impact fall fertilizer demand, potentially causing farmers to either delay or cut fertilizer applications.
