Central Florida: Last week was quiet on the Central Florida market. The lack of activity kept prices steady, but observers cited a new wrinkle in Mosaic’s pricing strategy for the region, the effects of which were up for speculation.
Mosaic declined to post prices for MAP and DAP railcars last week, citing CSX’s decision to discontinue posting freight rates publicly. Rail operators experienced pronounced tightness at times in 2014, and Mosaic previously alluded to what it believed would be a difficult winter logistics season.
Some believed the move signaled an openness to lower-priced, high-volume bids. But others countered that this scenario doesn’t track with Mosaic’s production cuts, contending that the producer would be happy to divert production to the more-lucrative offshore market while waiting for demand to firm in Central Florida. Rather than simply declining to post prices, they speculated, Mosaic would not offer product at all for the short term, at least not at volume. Mosaic’s posted price for DAP trucks was $430/st FOB.
Last done in Central Florida was quoted in a range of $425-$435/st FOB, with truck sales accounting for the higher levels. MAP, though believed to be unavailable, was expected to command a $20/st FOB premium to MAP.
U.S. Gulf: Barge prices firmed in a quiet week of trading, sources said. Early week DAP trades were reported around $412-$415/st FOB, before rising to as high as $420/st FOB at the end of the week.
The upward trajectory began early in the holiday week, though a handful of $410/st FOB transactions were reported dating to Nov. 26. Sources debated whether $410/st FOB DAP could still be had, and most concluded the market had moved higher. The January market pushed up as well, with prices quoted in the $420-$425/st FOB range.
Chinese DAP returned to the market last week, sources said. The material was said to be priced on par with domestic product and selling at $415/st FOB early in the week, with offers firming to $420/st FOB later on. Some market watchers claimed the imported DAP was not offered at NOLA, but was instead parked at destinations in St. Louis or Inola, and netted back to NOLA values.
The material was believed to be of similar quality to the better Chinese cargoes imported earlier in the year, which one contact called “surprisingly good” and unlike the hit-or-miss quality of phosphates imported from China in previous years.
MAP failed to keep step with DAP. Demand for MAP has eroded, leaving it priced around $430-$435/st FOB.
Few were surprised by the rising DAP values, and sources pointed to a number of potential causes. Supply was one likely instigator. Reduced NOLA inventories have left the river undersupplied. “There is a thin inventory of barges on the river,” one trader said. “There’s been a little movement (at warehouses) and people want to refill. It’s not so much that there’s a lot of trading (pushing up prices), but that it’s so thin.”
Strengthening grain prices also were a factor. The combination of rising corn futures and historically high yields has made farmers more comfortable than at any time in the last eight weeks, one source said.
End-users are also faced with a deadline – the end of the 2014 fiscal year. “Farmers didn’t get as much on fields as they wanted to because of the harvest stretching out this year,” said one source. “And now it’s getting to the end of the year and they have to get rid of some money. They’ve already bought what they can equipment-wise, so now it’s feed and fertilizer.”
The NOLA DAP market firmed to a range of $410-$420/st FOB, with the lower end of the range logged in Thanksgiving-week trading. MAP was called $430-