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

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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).

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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.

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