U.S. Gulf:
NOLA potash barge trades were reported in the $315-$325/st FOB range for near-term trades, up from the week-ago $315-$320/st FOB. However, most of the actual activity was reported in the forward market for fill tons, where players were citing June and beyond at $330/st FOB or higher.
Eastern Cornbelt:
Nutrien on May 5 announced a summer fill program for potash at $365/st FOB river terminals and $370/st FOB inland warehouses in the Midwest, with NOLA barge pricing referenced at $335/st FOB. Nutrien said orders would be taken through close-of-business on May 7 for delivery and invoicing by Sept. 30. Orders received after the fill book closes will be priced up $30/st, Nutrien said, and not guaranteed for delivery until after Oct. 1.
“The timing this year is a little earlier than normal,” Nutrien said in a statement. “This is in response to strong back-to-back application seasons last fall and this spring, which has drawn down retail potash inventory to very low levels and requires more time for us to plan.”
Nutrien said it anticipates another “robust fall application season” this year, and it expects to be “fully committed on potash for Q3” by the close of the fill order period. “Potash pricing remains firm both domestically and internationally, fueled by strong corn, soybean, wheat, cotton, and crude palm oil prices,” the company said. “Global availability of granular potash is very tight in all key granular potash markets, which is setting up competition between markets for granular supply.”
Mosaic on May 6 confirmed that it was also offering summer fill potash for May-September shipment at $365/st FOB river and $370/st FOB inland terminals in the Midwest, with NOLA barges referenced at the $335/st FOB level. The company said it expected the offer to close at the end of the week, when higher prices will be posted for Q4 availability.
The potash fill offers reflect a roughly $10/st drop from the last official spring postings from Canadian producers, with sources confirming recent prompt business at the $380/st FOB level out of inland warehouses amid reports of tightening supply. Some dealers questioned the timing of the fill offers, with one regional contact noting that the programs were out “before we even finish the spring season and have no idea regarding inventories at the end of the season.”
Western Cornbelt:
Sources continued to report prompt potash pricing at $350-$360/st FOB at the lower end of the range in the region.
Both Nutrien and Mosaic at midweek announced summer fill programs at $365/st FOB river terminals and $370/st FOB inland warehouses in the Midwest, with NOLA barges referenced at $335/st FOB for fill. Orders were required by the end of the business week for shipments through September, with Nutrien confirming a $30/st increase when the order book closes.
Northern Plains:
Sources quoted the potash market at $365-$370/st FOB St. Paul, with delivered fill ton offers in the $375-$385/st range in the Northern Plains. The market to U.S. buyers FOB Saskatchewan mines was pegged at $330-$340/st after netbacks, depending on grade.
Northeast:
Sources reported firming prices for potash in the Northeast. While offers for May-June tons began the week at $360/st FOB Fairless Hills, the price reportedly moved up to $380/st FOB on May 7 in the wake of the fill program announcements from Nutrien and Mosaic.
Eastern Canada:
Sources earlier in the week quoted prompt potash at C$545/mt FOB regional warehouses in Eastern Canada. On May 6, however, summer fill offers from both Nutrien and Mosaic were reportedly circulating at C$520/mt FOB warehouses for orders placed by close-of-business on May 7. After the order book closes, sources said the price will firm to C$560/mt FOB.
China:
Nutrien’s EVP and CEO of Potash Ken Seitz told analysts at the company’s first-quarter earnings call on May 4 that potash suppliers are continuing to target other higher netback markets instead of sending potash to China. He reiterated that Canpotex is committed on potash sales volumes into September (GM April 23, p. 14).
To date, Belarusian Potash Co. (BPC) is the only major supplier to reach a new contract supply agreement with China. BPC in February agreed with the Consortium of Chinese Buyers (Sinochem, CNAMPGC, and CNOOC) on a new price of $247/mt for deliveries through Dec. 31, 2021 (GM Feb. 10, p. 16).
The deal came on the heels of BPC’s settlement with India’s biggest potash buyer, Indian Potash Ltd. (IPL), in late January at the same price (GM Jan. 29, p. 17). BPC and IPL on April 5 subsequently agreed to a new contract price of $280/mt CFR after ICL and IPL did the same (GM April 5, p. 17).
“We’re watching China’s potash inventory levels closely at the moment because potash demand in China will be strong this year, and will continue to be strong going forward,” Seitz said.He estimatedChina’s current potash inventory at the ports at about 2.5 million mt, down from 3.7 million mt at this time last year. He noted that 1.5 million mt of that total is labeled as strategic reserve, resulting in only 1 million mt of useable product at the port.
Domestic prices for potash in China are reported at about $100/mt above the new revised India contract price, according to analysts cited by The Mosaic Co. in the company’s first-quarter earnings call on May 4.
Mosaic President and CEO Joc O’Rourke said potash price strength is evident in North America, Brazil, and Southeast Asia on the back of strong demand. He said price strength is also occurring in the China spot market, as evidenced by Canpotex’s tight supply position.
“We see all of these things as very positive for the potash market moving forward,” O’Rourke said. “I expect this to lead to an earlier and more constructive settlement with the Chinese at some point in the fall or early next year.”
At ICL’s first-quarter earnings call on May 6, CFO Kobi Altman confirmed that the company is looking to minimize potash tons to China and said it makes more sense to sell elsewhere.But Altman said ICL expects conditions to improve in China because there is “a significant disparity between the formal import price and the local price,” which he described as a spread of more than $100/mt.
“We think there will be a rationalization there probably before the year is over. So we expect new contract negotiations toward the end of this year,” Altman said. “In the meantime, we divert some of our China product elsewhere.”
Nutrien’s new President and CEO Mayo Schmidt told analysts that the company expects the recent increase in the Baltic Dry Index, which is issued daily by London’s Baltic Exchange and is a composite of the Capesize, Panamax, and Supramax timecharter averages, “to have minor impact” on the company’s offshore potash netbacks.
“Year-on-year ocean freights are on average $20/mt higher, but we anticipate the impact on our international potash netbacks will be less than $10/mt in 2021 due to Canpotex’s long-term freight arrangements,” Schmidt said.
ICL told analysts and investors at a company first-quarter earnings call on May 6 that rising shipping costs worked to their advantage relative to the competition because of the company’s advantageous geographical location. It said in the new Indian contract, for instance, some $20/mt was additional freight costs and ICL was netting an additional $30/mt out of the $50/mt increase secured.
Bangladesh:
The Ministry of Agriculture has called its annual purchase tender for the supply of potash and DAP, and is looking for 200,000 mt of standard potash for shipment by Oct. 15. The tender closes on May 27.
The country’s Cabinet Committee on Public Procurement has approved a proposal to import 180,000 mt of potash from Belarus under a government-to-government arrangement. The Bangladesh Post, citing Cabinet Division Additional Secretary Shahida Akhter, said the price has been negotiated at $292.87/mt.
Bangladesh typically buys its July 1-June 30 potash requirements under an annual purchase tender, as well as under government-to-government deals. The country imported 702,000 mt in calendar year 2019 and 120,000 mt in the first half of calendar 2020, according to the latest IFA data.
India:
RCF closed a tender for the supply of 105,000 mt of standard potash (35,000 mt firm quantities and 70,000 mt at buyer’s option) on May 3 (GM April 23, p. 15). Offers are required to remain valid for 30 days from tender opening.
Russia:
Potash exports in the first two months of 2021 were up 211 percent year-over-year, to 1.8 million mt, according to Trade Data Monitor.
Brazil:
Potash prices moved up again at Paranagua, to $350-$370/mt CFR. Sources said increased demand inland and at the ports will continue to put upward pressure on pricing. Adding to the upward pressure are reports that traders are telling potential buyers that they are sold out until September.
Rondonopolis is reported at $410-$466/mt FOB ex-warehouse, representing a slight move up from last week. Sorriso is reported at $440-$445/mt FOB ex-warehouse.
The barter rate for 1mt ton of MOP remains 55 bags of corn or 21 bags of soy at Rondonopolis. In Southern Goias, the rate is 22.9 bags of soy and 38.8 bags of corn.