Fourth Quarter Nutrient Composite Index: Timing Opens More Demand

The completion of harvest followed by a wide open weather window led to higher-than-expected demand for fall applied fertilizers. The result was a steady, 3.8% increase in the Inputs Monitor Nutrient Composite Index (NCI) through the final quarter of 2017. The uptrend was led by anhydrous ammonia, which added $35.11 per short ton to mark an 8.5% rise during the quarter. Urea was on a tear as well, firming 6.8% of its own during the quarter as UAN solutions were little changed.

The uptrend in fertilizer was supported by all seven of the fertilizers, although potash posted just a 1.5% rise as phosphates firmed roughly 4.0% per short ton. According to our indexed phosphate price, DAP and MAP remained overpriced compared to the rest of the fertilizers in the survey, which likely limited the upside on both.

Anhydrous prices fell to levels much lower than any recorded during the five-year life of the Inputs Monitor during the first week of November. That, combined with favorable application weather during the same time period spurred farmers to book NH3, and the added demand rather than supply shortfalls led to strength in NH3 prices, and strength in the NCI.

Farm diesel was led higher by seasonal demand for harvest and post-harvest activities, adding 9.7% during the quarter. Higher crude oil futures also contributed to diesel price strength as supply and demand fundamentals appeared to begin to rebalance. Propane was up 15.2% during the quarter on increased export demand and seasonal demand for grain drying and later, home heat and on-farm usage.