DAP (diammonium phosphate) prices mostly moved sideways for the week ended March 18, 2016. Ammonium phosphate fertilizers are the most widely used phosphate fertilizers globally. According to Mosaic (MOS), DAP is the phosphate fertilizer that’s used the most.
Average DAP prices
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. The average DAP prices in China also remained unchanged at 2,700 yuan per metric ton, or $415.90 per metric ton, last week. However, the yuan fell another 0.05% against the US dollar during the week. Average realized prices for DAP at Tampa also remained unchanged at $360 per metric ton compared to the previous week.
On the other hand, the average DAP price at US Gulf NOLA (New Orleans) for the week ended March 18 declined to $322 per metric ton ($302 per short ton) compared to $309 per metric ton ($341 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).