Listen to the Full Report
Our next grower call will be at 8 a.m. CST, Wednesday, December 11. Watch your email for details or contact your ADM Fertilizer representative for call information.
Read the Recap
Domestic Fertilizer Outlook:
Mark Wegner, Noah Bishop, Nick Peterson and Brock Anderson | ADM
Synopsis
- Limited U.S. imports and supply tightness are contributing to a bullish price outlook for urea and UAN moving into Q1.
- U.S. phosphate market remains tight due to strong global demand, import duties on key sources and projected shortfalls.
- While the potash market is currently well-supplied, supply risks could increase heading into 2025 due to instability in the international market.
- AMS stocks are tight, and with recent production losses, prices have rallied and continue to rise.
Nitrogen
Recommendation: There is an upside price risk going into Q1 due to limited cargoes arriving in North America and anticipated deferred buying. Consider layering in 25% to 75% of your urea or UAN for spring application offset with forward selling of grain to manage margins.
- Urea has been on a sideways trend for the past 3-4 months.
- In the East, China continues to remain out of the export market and India and southeast Asia demand remains strong.
- In the Western Hemisphere, Brazil continues to outpace the North American market in imports and prices, which is stagnating domestic imports.
- Constrained urea imports have kept the U.S. well behind in terms of supply availability.
- Moving into Q1, North American prices will need move up to attract imports.
- UAN imports have also been constrained, with intermittent domestic production, leading to expectations of tight supply and potential price increases in Q1.
Phosphates
Recommendations: If you’re a fall fertilizer user, don’t expect immediate price relief by waiting until the end of the season. Looking toward spring, keep an eye on the rollout of domestic winter fill programs in the next 2-3 weeks, which will set the U.S. market prices for winter fill and spring application.
- Fall application has seen better than expected demand despite rising phosphate prices.
- MAP and DAP have been up $30-$40 over the past 35 to 40 days.
- Discrepancies in regional moisture levels may result in a little bit of carryover volume, but the market remains tight, especially on the front end.
- Supply for the U.S. is relatively tight, especially on DAP, due to strong international demand.
- The U.S. market is projected to be about a million tons short in total finished phosphate supply from July 1st onward. Securing enough additional volume to fully catch up on phosphate supply shortfalls is unlikely.
- The expectation is that winter fill and spring phosphate reset values will be moderate, with no major price reset anticipated.
- Since 2020, Russian and Moroccan phosphate volumes have faced duties that prevent these products from entering the U.S. market.
- The expectation is that these duties will remain in place, continuing to limit U.S. supply with little to no volume anticipated from these regions, except for some Moroccan TSP.
- Moroccan phosphates entering the Canadian market have provided a little bit of relief for both Western and Eastern Canada on MAP and some of the NPS products.
Potash
Recommendation: Now is a good time to start looking at spring potash values if you haven’t already, especially given the potential geopolitical risks and potash’s strong affordability compared to other inputs and the grain board.
- The market continues to be adequately supplied.
- Unless certain geographies experience an extended or heavy run, we should be in good shape to finish up the fall season.
- Looking forward to 2025 and the spring season, winter fill programs will roll out in the next month or two.
- While inventories in many markets remain high or at historic levels, risks to supply could be greater than what we’ve experienced over the previous 12 months.
- Belarus is proposing to Russia a 10% supply cut to support the market, and ongoing risks from the Middle East — where 4 to 5 million tons of potash originate — could potentially lead to a tighter supply than projected for 2025.
AMS
Recommendation: Consider purchasing some of your AMS needs this fall to secure tons as supplies tighten and prices continue to move up.
- In North America, three main U.S. production plants and one in Canada supply most of the region’s product. All have all faced production issues over the past 2 to 3 months, leading to reduced output, tight stocks, and rising prices during what is typically a fill period.
- There’s a lot of supply of lesser-quality AMS in the global market, but it remains to be seen whether we will see imports of these products. AMS will continue to remain tight unless this occurs.
Other Fertilizer Products to Consider
ADM offers additional products beyond N, P and K that can help drive improved fertilizer ROI.
NeoVita™ 43 Biostimulant: A high-quality liquid sugar that can be used as a foliar or in-furrow application that provides an added boost in crop performance.
BiOWiSH® Fertilizer Enhancement: A fertilizer efficiency product featuring four strains of bacillus to maximize fertilizer utilization in the field. It is available to be applied to dry fertilizer tons from ADM blending facilities or into liquid.
Grain Market Update: Daniel Overberg | ADM
Synopsis
- Despite record demand, corn prices are likely to remain range-bound between $4.20-$4.40. Steady demand and limited supply cushion offer some upside potential, but the market isn’t expected to shift into a strong bull market.
- Soybeans face a mix of demand uncertainty and lower supply risk, in contrast to corn, where demand uncertainty could present an upside.
- U.S. wheat stocks are stable while global supply is slightly tightening. Wheat will likely follow corn’s lead in market influence.
Corn
- The corn market is somewhat conflicted; we are experiencing record U.S. production but a contracting global balance sheet, with a ’24/’25 carryout of 304 million metric tons down from 314 million in ’23/’24.
- Robust U.S. exports have provided support to the market, driven mainly by unexpected demand from European countries, pushing U.S. export numbers to levels not seen in a while.
- December corn prices bottomed out around $3.85 in late summer/early fall and have since inched higher. However, this isn’t considered a bull market.
- Current conditions suggest a need to ensure sufficient corn acreage next year due to record domestic and global demand.
- Even as prices rose, demand has not been rationed; instead, demand has remained steady or slightly increased, aligning with record U.S. production and steady-to-contracting balance sheets globally.
- The Black Sea has been more active in selling, causing a slight pause in demand.
- The December contract faces resistance at the $4.40 level, suggesting a range-bound trade between $4.20 and $4.40, with more risk to the upside than downside given the current market dynamics.
Soybeans
- The WASDE recently lowered the yield for soybeans, which wasn’t unexpected, though the rate of change was a bit surprising. There’s an assumption yields may be adjusted lower again in January.
- The historically dry conditions during harvest led to beans drying down quickly, which contributed to the reduced yield and impact on the balance sheet.
- The U.S. balance sheet shrank from a 550-million-bushel carryout to 470 million bushels.
- Crush was reduced by 15 million bushels, and exports were cut by 25 million bushels; this export cut seemed premature, but concerns over Chinese demand are now increasing.
- COFCO recently lowered its Chinese demand, dampening the bullish supply outlook seen after the WASDE report.
- China’s bean buying has been very spot-focused, which has made demand patterns difficult to predict. While demand has generally matched forecasts, China still has significant open positions for December and January.
- Brazilian weather is favorable overall, with recent dryness not appearing to be a current threat to supply.
Wheat
- The Russian crop is expected to be around 84 to 85 million metric tons, which is below what’s typically considered normal, with winter seedings down compared to usual levels.
- The U.S. has a comfortable and growing balance sheet, but the global balance sheet is projected to decline by about 9 to 10 million metric tons, or around 1% in stocks-to-use ratio.
- Corn is expected to take a lead in market influence, with wheat likely acting as a follower rather than a primary driver for price movements.
Questions from Our Growers
Growers who attend the conference call have the opportunity to get their questions answered by our industry experts.
Is corn experiencing the same issue as soybeans, where lower moisture is leading to lower yields? And if corn is experiencing similar yield impacts, could this eventually catch up with grain prices?
- The rate of change in corn moisture was more muted relative to beans.
- In general, corn came off drier than normal this year. Eastern locations saw 14.5% to 16% moisture. Some regional pockets did see extremely dry corn, with moistures of 11% to 13%, but that was more of a regional issue, not a national phenomenon.
- We’ve already seen a slight revision lower in corn yield estimates down to 183.1 from 183.8, reflecting a more muted impact from dryness compared to soybeans.
How will China’s low urea exports affect the market going forward given China’s record-low fertilizer and nitrogen exports?
- China has significantly reduced its urea exports this year and they are not expected to resume exports until Q2 2025.
- While China’s cutback is largely priced in, increased seasonal demand from Southeast Asian countries in early January, combined with limited Chinese availability, may drive prices higher in Q1.
MAP values are high relative to the price of grain. Historically, when we see price relationships like this, do you see a significant change in demand that would make it worth waiting versus buying now?
- Historically we have seen fertilizer prices follow the commodity complex and not vice versa. High prices eventually cure high prices, but for that to happen, there needs to be a significant reduction in demand to create an oversupply of the product.
- Currently MAP prices are high with limited supply options into the U.S. market, making it unlikely to see significant price drops before spring.
- Longer-term price declines could happen in the next 2-3 years, but much depends on international factors, particularly China’s phosphate export policy and overall global supply availability.
Are you seeing any trends in what types of nitrogen products are being applied and how it might affect pricing?
- While the ammonia book for fall was strong, actual application will depend heavily on weather in the next 2-3 weeks, with dry or cold conditions in some areas potentially limiting ammonia use and shifting demand to spring urea.
- Long-term trends show stability in nitrogen application methods, with large ammonia sales annually, but actual application often varies due to weather.
- There is strong, pent-up nitrogen demand expected in Q1, so regardless of ammonia application impacts this fall, spring urea demand is unlikely to be affected significantly.
ADM is providing this communication for informational purposes, and it is not a solicitation or offer to purchase or sell commodities. The sources for the information in this communication are believed to be reliable, but ADM does not warrant the accuracy of the information. The information in this communication is subject to change without notice. If applicable, any information and/or recommendations in this communication do not take into account any particular individual’s or company’s objectives or needs, which should be considered before engaging in any commodity transactions based on these recommendations. ADM or its affiliates may hold or take positions for their own accounts that are different from the positions recommended in this communication.