Fertilizer Margins, Supply and Trends · · 2017-01-24Fertilizer Margins, Supply and Trends Doug...
Transcript of Fertilizer Margins, Supply and Trends · · 2017-01-24Fertilizer Margins, Supply and Trends Doug...
Fertilizer Margins, Supply and Trends
Doug Goff
MABA Convention
January 2016
Overview
• Margins
• Supply
• Trends
New Large Merger
US Farm Income
Market Fundamentals
Fertilizer Supply
• New Production
– UAN
– Urea
– P and K
• Imports
• PCS/Agrium Merger
Fertilizer
• Factors Influencing Fertilizer Industry
– Strength of Dollar
– Supply vs Demand
– Commodity Prices
– Gas Prices
– Freight/transportation
– Regulatory
Confidential 9
Supply Side
Source: GTIS Source: TFI & Koch
SUPPLY / DEMAND
• Nitrogen
• Suppliers
– CF Industries
– PCS/ Agrium
– Koch
– Coffeeville
– Russia
– China
– Traders
SUPPLY / DEMAND
• Potash
• Suppliers
– PCS / Agrium
– Mosaic
– Russians
– K+S
– Traders
SUPPLY / DEMAND
• Phosphate
• Suppliers
– Mosaic
– PCS/ Agrium
– OCP
– Traders
Confidential 13
Demand Side
Source: USDA, Informa, Koch
Source: Koch, AAPFCO Source: Koch, AAPFCO
Outlook 2017
• Product Outlook
– Nitrogen-strengthening-layers sold-re-priced by side-dress? Low YE inventories good
– Phosphate-flat
– Potash-increases post fall (will they stick?)
– 10-34-0-some increase with acid increase expected
PCS and Agrium • $36B Enterprise w/ .5B Synergies
• Reduces Competition and Raises Prices/Returns
• Potash Corp shareholders will own about 52 percent of the new company, with Agrium shareholders owning the rest after the deal closes, which is in mid-2017
Margins 101 • Focus on GP/Ton vs. % GP
– $300/ton product 20% GP=$60/ton
– $200/ton product 20% GP=$40/ton
– Set margin per ton at $60/ton
• Blends vs. Straight Goods – Add value with AMS, Pel Lime, KTS, KMAG,
10-34-0 with Sulphur etc.
• Variable Rate – Adds technology income-rec’s and application $’s
Blend Example
• PK Standard: 300#/acre (60% K/40% P) @ Dealer Profit $60/ton – Grower Cost: $ 50.25 / acre
– Dealer Profit: $ 9.00 / acre
• PK plus AMS: 300#/acre (60% K/40% P) – Grower Cost: $ 50.73 / acre
– Dealer Profit: $ 10.89 / acre
• PK plus AMS, Mn, Zn, B: 300#/acre (60% K/40% P) – Grower Cost: $ 56.92 / acre
– Dealer Profit: $ 14.20 / acre
• Helena Proprietary ASK Blend: 300#/acre (60% K/40% P) – Grower Cost: $ 68.34 / acre
– Dealer Profit: $ 22.60 / acre
Margins 101
• Layering – Growers should layer like us
– Take a position, offer one
• Direct tons vs applied tons – Early fill, cash and contract
– Spring delivered and stored-add storage fees/month
• “Sun down” pricing-”good till sundown”
• Ask a lot of questions
Other Ideas • Set up N programs to include foliar CRN-carry the
fungicide
• Replace soil applied N with CRN
• Foliar nutrition role in plant health and reproductive development-tissue sample
• 4R’s more foliar, less soil
• Soil scan VRN
• VRT-Grid or Zone
• No service NH3
% of Yield Cost
US Yield History
Trends
• Sustainability-4R
• Grower storage and application
– Strategy for servicing-differentiate pricing
• Nutrient management plans-manure
• VRT from yield and soil tests
Analyze Profit
• Annual sales trends /customer
– tons and dollars
– GP $ and GP/ton
• 3 Year trends for business
– tons and dollars
– GP $ and GP/ton
– Operating Expense of operations
Training
• Sales Training
• Segmentation
• Precision Ag
• 4R
• CCA
• TSP
Thank You Questions?