What Happened to Agrium’s Retail Fertilizer Realized Prices in 2Q16?



Retail realized prices

Previously in this series, we discussed how shipments from Agrium’s (AGU) Retail segment have declined YoY (year-over-year). In this part, we’ll look at the segment’s average selling prices.

Notably, prices for agricultural fertilizer have been declining over the past few years as a result of lower crop commodity prices and imbalances in supply and demand across the industry (MOO).

Article continues below advertisement

Average selling prices

Average selling prices in North American and international markets declined in 2Q16 by as much as 15% YoY (year-over-year). The average selling price in North America declined by 16%, from $550 per metric ton in 2Q15 to $462 per metric ton in 2Q16. The average selling price in the international market declined by 14% from $454 per metric ton to $390 per metric ton.

Remember, PotashCorp (POT), Mosaic (MOS), CF Industries (CF), and Intrepid Potash (IPI) are also impacted heavily by declining fertilizer prices. To divest risk, investors can consider a broader portfolio such as the Materials Select Sector SPDR ETF (XLB), which invests about 12% in the agricultural chemicals business.

The weakness in fertilizer prices also impacts Agrium’s Wholesale segment. But before we take a closer look at this segment, let’s see how Retail’s gross margin performed in 2Q16.


More From Market Realist