Sulfur and ammonia
Sulfur and ammonia are two raw input materials besides phosphate rock that are required for making phosphate fertilizers.
Input prices fell
Prices of ammonia have fallen over the past one-year period and are trading at $271 per short ton—one short ton being 2,000 pounds—in February 2016.
Ammonia is a nitrogen-based fertilizer is made with natural gas or coal. The prices of both natural gas and coal have been falling over the years. Because natural gas is available in abundance, lower prices encourage more players to enter the market, creating a supply glut and pushing prices down.
CF Industries (CF), Terra Nitrogen (TNH), PotashCorp (POT), and CVR Partners (UAN) are some of the largest producers of nitrogen fertilizers in North America. The former three companies use natural gas as input material, while CVR Partners (UAN) uses coal as input material to produce nitrogen fertilizers. The Mosaic Company (MOS) will be sourcing its supply from CF Industries.
Some of these companies are held by the Materials Select Sector SPDR ETF (XLB), which invests 12% of its portfolio in agricultural chemicals.
More recently, the prices of natural gas have started to increase. They are anticipated to continue to rise in 2016 and 2017, according to the U.S. Energy Information Administration. To learn more, you can read Fertilizer Gone Wild? Your February Update and 2016 Outlook.
Sulfur prices have remained flat over the same one-year period, trading at $48 per metric ton—one metric ton being ~2,206 pounds—in February 2016.