Previously, we saw that phosphate fertilizer companies such as Mosaic Company (MOS), Isreal Chemicals (ICL), and PotashCorp (POT) have turned positive for the year. Let’s look at phosphate fertilizer prices to see why that might be the case.
Ammonium phosphates are the most widely used phosphate fertilizers globally. DAP (diammonium phosphate) is the most-used among phosphate fertilizers, according to Mosaic. The VanEck Vectors Agribusiness ETF (MOO) invests about 2.9% of its portfolio in Mosaic and 3.8% in Agrium (AGU).
DAP prices at US Gulf NOLA (New Orleans) and in the Corn Belt region have picked up in March 2016. The average DAP prices for the week ending March 4 at the US Gulf NOLA stood at $308 per metric ton ($340 per short ton) compared to $321 per metric ton ($254 per metric ton) a week ago.
The average prices at the Corn Belt have increased to $344 per metric ton ($380 per short ton) from $335 per metric ton ($370 per short ton) a week ago.
Average DAP prices in China, on the other hand, have fallen slightly to 2,700 Chinese yuan ($414.5 per metric ton[1. Using USD/CNY rate of ~6.51]) from 2,706 yuan ($415.4 per metric ton) a week ago. However, over this one-week period, the yuan fell slightly by 0.05%. Average realized prices for DAP at Tampa have remained unchanged at $360 per metric ton compared to a week ago.
The planting season
Corn planting season in the United States falls between March and June. The rebound in prices may indicate that customers are purchasing for the planting season.
In China and Europe, the planting season falls between February and May. As the demand for phosphate fertilizers picks up, DAP prices may find support at their current levels.