Several industry players told Green Markets last week that a big run on anhydrous ammonia this spring season may be crimping demand for urea.
CF Industries Holdings Inc. Senior Vice President and CFO Anthony Nocchiero was in tune with this assessment in speaking before the Goldman Sachs Basic Materials Conference June 3. “As we came into this spring we expected about 2.4-2.6 million tons of ammonia to be applied. We’re thinking now that upwards of 3 million tons of ammonia was probably applied this spring,” said Nocchiero, “which would make it one of the best springs since the early 1990s.”
Nocchiero said some of that extra ammonia application will probably come out of urea demand. He thinks demand for UAN overall is still going to be very strong, however, and he said CF expects a strong sidedress season. Overall, he said the high ammonia use benefited CF due to its ag ammonia transportation and distribution advantage.
Agrium Inc. also saw a rush of ammonia use during the spring, particularly during a three- or four-week period in March, according to Agrium Vice President Retail Thomas Warner, also speaking before the Goldman Sachs Conference.
Agrium spokesman Richard Downey told Green Markets that Agrium retail demand for ammonia was clearly up, with regional shortages across much of the U.S. He said wholesale ammonia demand from Western Canadian plants was likely down due to very, very wet weather in Western Canada. Warner added that a lot of land in Western Canada that still isn’t planted may not get planted this year.
Warner was optimistic about the season and going forward, saying the farmers are again buying fertilizer. “The farmers do know fundamentally what it costs or what it takes to raise a bushel of corn or a bushel of soybeans.” Warner said farmers knew they were depleting the soil in 2009. “Then last fall we saw it come back to normal plus rates for NPK, as well as this spring.” He predicts farmers will get their crops in early this year versus last year, when they were harvested late. He expect farmers to be back to normal fertilizer application rates this fall.
While Warner said North American NPK rates are back to normal, he thinks internationally that is true only for nitrogen and phosphates. Potash will take another year, he said, citing demand in China and Brazil.