Fertilizer price action during the fourth quarter of 2016 suggested a price floor was placed in early November. The summer’s downtrend flattened after harvest as urea and potash firmed steadily. While mild strength in potash was of little concern thanks to potassium’s low relative price, strength in urea alongside fresh highs in natural gas futures suggested increased upside price risk across the nitrogen segment.

Year-on-year, fertilizer prices ended 2016 sharply lower with expected new-crop corn revenue per acre falling just 42 cents during the period as anhydrous ammonia fell $119.07. 2016 began with our Nutrient Composite Index at a 21.18 premium to expected new-crop revenue, but pressure on nitrogen and potash throughout 2016 forced the index to a 105.72 discount to expected new-crop revenue. Despite hinting at a price floor near the end of 2016, as the calendar flipped to 2017, nitrogen, phosphate and potash were all priced 15% to 20% below the same time last year and well below expected new-crop corn revenue.

Despite generally sideways price action in the corn market as the fourth quarter of 2016 came to a close, fertilizers and farm fuels favored a more bullish tone after four years of nearly constant price pressure. Expect urea and potash to lead price strength through the winter off-season and for phosphate and anhydrous ammonia to track sideways amid mild upside price risk.