Central Florida: Rail delays continued to drag on the Central Florida phosphate market. Domestic shale oil, shipped to refineries predominantly via rail lines, is on pace to post its highest production total in 27 years. The bumper grain crop was also taxing rail capacity.
Rail operators were reportedly planning to increase average train velocities, and were also adding personnel and boosting locomotive numbers in hopes of shortening delivery times. Such measures were unlikely to pay dividends in the near term, however.
Traders said the railcar logjam would likely put off some phosphate buyers from prompt purchases. Prices on the Central Florida DAP market were called $435-$440/st FOB, unchanged from the previous week. MAP continued to be unavailable, traders said, with posted prices running $20/st FOB over DAP.
U.S. Gulf: The NOLA barge market continued its slow streak last week, thanks in part to the Labor Day holiday and The Fertilizer Institute’s (TFI) upcoming World Conference. “Must be August,” one source quipped.
Despite relatively stable prices recently, diminished trade volumes contributed to some price confusion last week. The uncertainty was centered on a barge sale with a reported value of $455/st DEL and fueled by the still-convoluted freight situation.
The transaction was said to include $30/st shipping to the Twin Cities area, which would put the barge’s NOLA FOB price close to $425/st. However, many industry watchers cried foul, claiming the actual contracted shipping cost, which the seller was believed to pay, was closer to $17.50/st, placing the transaction’s netback in the neighborhood of $437.50/st FOB.
The trade could have sizable implications for a market divided on price direction, and its accuracy as a barometer of market sentiment was vigorously debated by industry observers. At least one other trade was recorded at a $435/st FOB netback, and a handful of sales were reported in the upper $440s/st FOB, representing the market’s top end.
Delivered price quotes remained a preferred pricing structure, as the murky freight climate made FOB prices unreliable in the opinion of many traders. “The freight market is a mess, and everyone is trying to ‘game’ it,” one trader said.
A lack of price agreement was evident in the market. On one side were producers holding tight to $455/st FOB NOLA offer levels for September shipping, while a significant segment of the market pushed DAP bids in the $435-$440/st FOB range, based on a number of factors.
Low grain prices nurtured doubts about farmers’ willingness to pay top-dollar phosphate prices, and ongoing logistics concerns have made the spot market less palatable for some potential buyers in the short term, sources said.
According to one source, however, one thing helping to support the domestic market was its low price relative to international levels. “Right now, U.S. prices are the lowest netback in the world (for foreign sellers),” he said. “Hesitance by international producers to send anything beyond contracted amounts to the U.S. is keeping supply leaner than it might otherwise be.” This, he said, was “contributing to keeping the price up.”
While earlier fears held that the river market would be flooded by cheap Chinese phosphates, one source said Chinese producers now claim to be out of stock, preferring instead to direct new product to higher-netting markets such as India.
The price of DAP sold on the NOLA barge market softened to $435-$447/st FOB, down from $445-$450/st FOB at last report. MAP levels were said to remain firm in a range of $475-$480/st FOB.
Eastern Cornbelt: Sources quoted the DAP market at $480-$490/st FOB regional warehouses in th