Previously, we saw how prices of ammonia and hydrogen sources such as natural gas and coal have moved. This impacts phosphate fertilizer companies such as Mosaic (MOS), Israel Chemicals (ICL), and PotashCorp (POT). Now let’s look at phosphate fertilizer prices.
Ammonium phosphates are the most widely used phosphate fertilizers globally. DAP (diammonium phosphate) is used the most in 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).
Last week, the average price of DAP in the Corn Belt remained unchanged at $354 per metric ton ($390 per short ton) compared to the previous week. However, average DAP prices in China increased slightly to 2,706 yuan per metric ton, or $418.60 per metric ton. Keep in mind that the yuan rose 0.05% against the US dollar during the week. Average realized prices for DAP at Port Tampa Bay also remained unchanged at $360 per metric ton compared to the previous week.
The average DAP price at US Gulf NOLA (New Orleans) for the week ended March 25 rose to $340 per metric ton ($308 per short ton) compared to $302 per metric ton ($333 per short ton) in the previous week.
Mosaic (MOS) has been converting its DAP facilities to its MicroEssentials products, which, according to the company, commands a higher premium. According to Mosaic’s management, MicroEssentials generates $40 more in revenue per unit compared to DAP.
About 20% of Mosaic’s revenue comes from its potash fertilizer segment. The outlook for potash fertilizer is bleak for 2016. This impacts companies such as PotashCorp (POT), Intrepid Potash (IPI), and Agrium (AGU). Investors who want to diversify risk might look into a broader portfolio such as the SPDR S&P North American Natural Resources ETF (NANR), which invests about 1.6% of its portfolio in Mosaic.
In the next part of this series, we’ll turn our attention to the second most important phosphate fertilizer—MAP (monoammonium phosphate).