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Crops/Weather

Crops/Weather, Eastern Cornbelt, Market Watch, South Central, Southeast, Southern Plains, Western Cornbelt

Grain Futures: As of 4:00 p.m. on Feb. 25, corn, soybean, and wheat futures were lower compared to the week before.

March 2016 corn was posted at $3.555/bushel, down from $3.655/bushel, and corn for May 2016 slipped to $3.605/bushel from the previous week’s $3.6975/bushel. Contracts for December 2016 corn were $3.7975/bushel, down from $3.865/bushel the week before.

Soybean prices for March 2016 were $8.59/bushel, down from $8.7975/bushel the previous week. May 2016 soybeans fell to $8.655/bushel from $8.8275/bushel the week before, and November 2016 soybeans were $8.7675/bushel, down from $8.905/bushel at last report.

March 2016 wheat punched in at $4.4625/bushel, down from $4.5325/bushel, while July 2016 wheat contracts traded at $4.675/bushel, below the previous week’s $4.7325/bushel. Wheat for September 2016 was $4.8075/bushel, down from $4.8725/bushel the week before.

Eastern Cornbelt: Winter Storm Petros blanketed large sections of the Eastern Cornbelt with heavy snow on Feb. 24-25. Petros dropped as much as 17 inches in La Porte, Ind., 15 inches in Gary, Ind., and 14 inches in Riverdale, Mich. The storm caused power outages and road closures due to blowing and drifting snow, with wind gusts clocked at 62 mph in Gary.

Illinois and Ohio were also in the storm’s path, with nearly 8 inches of snow recorded near Crete, Ill., and up to 4 inches in western areas of the state. The storm left vehicles and drivers stranded overnight in Grant Park, Ill., and resulted in a travel ban for portions of the Ohio Turnpike.

Western Cornbelt: Winter Storm Petros left up to 7 inches of snow in parts of Missouri at midweek, causing power outages and a brief closure of Interstate 270 in western Missouri due to downed power lines. News reports said nearly 10,000 customers were without power late on Feb. 24, mostly in the St. Louis area, but the number was significantly higher earlier in the day.

Elsewhere in the region, warmer temperatures and melting snow caused a number of rivers in central Iowa to rise rapidly, raising concerns about flooding and ice jams. Parts of the Des Moines and Raccoon Rivers saw minor flooding at midweek in the Des Moines metro, and Des Moines River flooding was also reported in the Fort Dodge area.

The rising rivers reportedly prompted suppliers to stop loading trucks at some Iowa terminals last week.

Southern Plains: Multiple heat records were posted across the Southern Plains region at mid-month, accelerating the return of abnormally dry soil conditions to areas of Texas and New Mexico. Parts of southern and eastern Texas, however, were hit with a strong line of thunderstorms early in the week that produced damaging winds, large hail, and widespread power outages.

Favorable weather for fieldwork was reported across most of the region in late February, and sources said heavy fertilizer movement for preplant corn and wheat topdressing has strained inventories at regional shipping points. Sources reported several days with a record 500-plus trucks per day moving out of the port of Inola/Catoosa in late February.

“The season is catching up with the procrastinators,” said one regional source. “Supply is a challenge, transportation is a challenge, pricing is moving up, and allocation is associated with several products from multiple sources. We are running hard on everything.”

South Central: Much of the South Central region experienced severe weather at midweek. Strong thunderstorms moved through eastern Tennessee and southern Kentucky, causing heavy rains and damaging winds. The system also brought snow to the higher elevations of northern and western Arkansas, with reports of some locations collecting 8-9 inches on Feb. 24.

The region’s worst weather, however, was reserved for Louisiana and Mississippi, where extensive damage from at least six confirmed tornadoes caused state of emergency declarations in both states on Feb. 23.

The weather left few opportunities for fieldwork in the region in late February. “We are extremely wet here, with no movement to the field,” said one regional contact on Feb. 24. “The Delta area is wet, and getting wetter and deeper today,” added another.

Arkansas sources said the moisture will kick-start some fertilizer work when fields dry. One contact said his location saw “a good run on P and K, as well as some wheat applications the last two weeks,” but last week’s precipitation brought business to a halt. “I’m sure we will see spot shortages at the terminals as we go forward if the weather clears up,” he said. “We haven’t had many positions taken by farmers or dealers, so there is a lot of buying to do.”

Southeast: A powerful line of thunderstorms triggered tornado warnings across much of the Southeast at midweek, and also produced torrential rains and damaging winds. A total of 30 twisters were reported on Feb. 23 across the Southern U.S., the National Weather Service said, leaving widespread power outages across Florida, Alabama, Georgia, and the Carolinas.

The storms brought heavy rains to many areas, with one Georgia contact reporting that his area received 4-5 inches overnight on Feb. 23. As a result, flash flood watches were in effect for multiple locations in Georgia and Alabama at midweek.

Minimal fieldwork was reported in the region last week, with many areas reporting saturated field conditions.

Sulfuric Acid

Market Watch, Sulfuric Acid, U.S. Gulf

U.S. Gulf: Sources continued to call the Gulf import market in a range of $35-$45/mt CFR, tracing the numbers back to northwestern Europe smelters reportedly commanding a range of (-)$5-$5/mt FOB.

Most European business was called in the $0-$5/mt FOB range, with a smattering of deals reportedly dipping into negative netbacks. “There are spot opportunities everywhere,” said one market player.

Acid to Brazil was called $35-$45/mt CFR, unchanged from the week before. The price at Chile was expected to run $45-$60/mt CFR, also flat from the previous week.

Alcoa Inc.’s Portland, Ore., smelter is the latest U.S. aluminum smelter to face potential closure, according to reports. Faced with tumbling aluminum prices and an expected $50-$90 million annual increase in electricity costs, the facility could be on track to post losses totaling $100 million in 2017, sources said.

The smelter has already undergone production cuts, and Alcoa documents filed in January listed the facility as “idled.” Alcoa has closed or sold 14 plants since 2007.

London Metal Exchange prices were mixed at the Feb. 24 close of trading. Aluminum, copper, nickel, and zinc were higher for the week, but lead was down.

Aluminum rose to $1,552.00/mt from $1,520.00/mt a week earlier, and copper was logged at $4,585.50/mt, an increase from $4,562.00/mt in the previous report.

Lead was $1,689.50/mt, a drop from $1,750.00/mt at last check, and nickel closed the day a $8,520.00/mt, up from $8,240.00/mt the week before. Zinc was up as well, showing $1,727.00/mt versus $1,664.00/mt a week earlier.

Sulfur

ADNOC - Abu Dhabi, Aramco, Market Watch, Sulfur, Tampa, Tasweeq, U.S. Gulf, Vancouver, West Coast

Tampa: The improving phosphate market cast a rosy glow over domestic sulfur last week, sources said, causing some market players to soften their opinion of a predominantly bearish outlook as recently as a week ago.

“The improved outlook of the fertilizer producer, along with the refinery complex going into turnaround season, seems to be changing the pulse of the market,” said one contact.

The start of widespread refinery turnarounds coincided with a drop-off in Gulf cargo availability. “I’m not seeing any more distressed tons in the Gulf here recently,” said one source. “We seem to be settling into a good supply-demand pattern.”

First-quarter molten sulfur contracts were valued at $95/lt, $15/lt below the fourth-quarter 2015 price of $110/lt.

Domestic refining capacity fell last week, according to the U.S. Energy Information Administration (EIA). Utilization was 87.3 percent for the week ending Feb. 19, a 1.0 percent drop from the previous week’s 88.3 percent. The number also landed just shy of the year-ago 87.4 percent, but was ahead of the 86.2 percent five-year average.

The EIA also noted a decrease in average daily crude inputs. Inputs averaged 15.685 million barrels/d, a 163,000 barrel/d decline from the prior week’s 15.848 million barrels/d.

U.S. Gulf: Sources called the Gulf market flat at $85/mt FOB.

Vancouver: Vancouver market players reported no change in the price of formed product. Last-done spot was quoted in a range of $80-$90/mt FOB.

The Chinese spot market continued to be called $90-$95/mt CFR.

Sources put Alberta netbacks at (-)$27-$60/mt FOB, unchanged from last report.

West Coast: Prill sold from the West Coast was quoted at $75-$85/mt FOB, unmoved from the previous week.

First-quarter molten sulfur contracts ran $65-$115/lt FOB, sources said.

ADNOC: Formed sulfur produced by the Abu Dhabi National Oil Co. was priced at $105/mt FOB Ruwais for February, a $17/mt decline from the $122/mt FOB January price.

Aramco: Saudi Aramco cargoes for March loading were valued at $90/mt Jubail, $25/mt below February’s $115/mt.

Tasweeq: The official February Qatar sulfur price was $89/mt Ras Laffan, a $30/mt drop from $119/mt in January.

Potash

Brazil, Eastern Cornbelt, India, Malaysia, Market Watch, Potash Muriate, South Central, Southeast, Southern Plains, Taiwan, U.S. Gulf, Western Cornbelt

U.S. Gulf: Barges continued to be called $195-$205/st FOB, with most citing the lower end of the range.

Eastern Cornbelt: Potash prices in the Eastern Cornbelt continued to tumble, fueled by another producer price cut in late February. PotashCorp reportedly lowered its river and inland warehouse pricing to $240-$245/st FOB, down approximately $20/st from the last reference price. Sources generally pegged the regional market at $240-$250/st FOB for the week.

“The high end is shrinking, the low end only slightly less, and some guys are seeing steady pull and looking for resupply,” said one contact. “The big push should be close, and maybe this is about the bottom as all other products are seeing upward price movement.”

Western Cornbelt: The potash market had reportedly fallen to $240-$250/st FOB regional warehouses in the Western Cornbelt, down $5-$10/st from last report, with the new levels reflecting lower producer prices that took effect in late February.

Southern Plains: The potash market FOB Catoosa was down to $240-$245/st FOB, with one source describing the current market as an “almost name-your-price opportunity.” The most recent reference prices FOB Carlsbad, N.M., were quoted at $260-$267/st FOB, depending on grade.

SOP Magnesia FOB Carlsbad was tagged at $350-$355/st.

South Central: The potash market was pegged at $240-$250/st FOB warehouses in the South Central region, down another $15-$20/st from last report, depending on location. The Memphis potash market was pegged at the $245/st FOB level in late February.

Southeast: Potash pricing continued to decline in the Southeast. Sources quoted the regional market at $240-$250/st FOB port terminals and $260-$268/st rail-DEL, down roughly $10/st from last report.

Malaysia: The potash market in Malaysia is quiet. The tendering season is over, with the big plantations having covered their requirements. Local sources say small buyers with outstanding requirements are mostly delaying purchases in the expectation of securing lower prices.

TDM Plantation Sdh Bhd. has reportedly not yet made an award under its tender for 7,000-8,000 mt of standard potash. Local sources assess prices for standard material as equivalent to $255-$260/mt CFR port bulk.

Taiwan: Taiwan Fertilizer Co. (TFC) has awarded its recently closed tender for 25,000 mt of potash. TFC has not disclosed the supplier or any price details. The tons are for April arrival at Taichung port.

Nepal: State-run Agriculture Inputs Co.  Ltd. said it is still assessing the offers received under its tender for 5,000 mt of potash for delivery to the buyer’s warehouses. The tender closed on Feb. 15, and offers are to remain valid for 21 days after tender closing.

India: After two years of drought, the country could get a normal monsoon this year. India’s Economic Times reported that the El Niño weather phenomenon, which was responsible for the droughts, is expected to turn neutral during the monsoon season, according to Indian weather forecast models and a number of international models.

The droughts reduced crop plantings and led to a steep reduction in stocks of important agricultural commodities, so the prospect of normal rainfall has raised hopes for 2016/17 agricultural production and fertilizer consumption.

Last week, India’s government took the decision to halt imports of potash for the remainder of the current fertilizer year, which ends on March 31, amid a decline in domestic consumption and around 1 million mt of potash inventories (GM Feb. 19, p. 8).

With good monsoon rains during the June-September period, P.S. Gahlaut, the managing director of Indian Potash Ltd., anticipates potash imports of around 3.5 million mt in the next fertilizer year beginning in April. If the monsoon rains were to fail, a much smaller volume would be needed, he said.

In recent years, India has imported more than 4 million mt of potash annually. In the first 10 months of the current fertilizer year, imports are estimated to have fallen 22 percent year-over-year, to 2.942 million mt (GM Feb. 19, p. 9).

Brazil: Vale produced 137,000 mt of potash at its Taquari-Vassouras mine in Sergipe state in fourth-quarter 2015. This was up 10.3 percent from the 125,000 mt produced in the third quarter, but 6.8 percent below the 147,000 mt produced a year earlier.

Full-year production was 2.3 percent lower at 481,000 mt, down from 492,000 mt, which Vale attributed to lower ore grades at the mine.

Phosphates

Brazil, Central Florida, Eastern Cornbelt, Europe, India, Latin America, Market Watch, Middle East, Nepal, Phosphate Rock, South Central, Southeast, Southern Plains, U.S. Exports, U.S. Gulf, Western Cornbelt

Central Florida: Sales of truck-loaded DAP were quoted in the $365-$370/st FOB range, up from the previous week’s $360-$370/st FOB. MAP moved up as well, to $375-$385/st FOB from the prior week’s $370-$380/st FOB range.

U.S. Gulf: Phosphate players described another week of barge market firming. Prompt DAP trades were reported in a range of $330-$339/st FOB, and MAP moved up as well to $335-$345/st FOB.

Additionally, Chinese tons unsold from a surprise fall cargo were reportedly offered in the $325-$327/st FOB range.

Sources generally attributed the higher prices to a segment of deferred winter demand coming due. Others pointed to weather improvements in the Northeast, where some forecasts said the Ohio River Basin was exiting the worst of the winter ice season.

Whether the firming market was indicative of long-term health or a short-term spike was up for debate. A hefty import lineup led some market players to predict softer values come March. “We’re seeing three EuroChem cargoes, one PhosAgro, and three OCP panamaxes, all for March arrival,” said one trader. “Most still see prices going down once imports arrive.”

Others believed the material en route would meet demand without tipping the market lower. “The cargoes coming appear to be needed supply, in my opinion,” argued another trader.

The market may also face a battle with itself once the March imports arrive. Some observers continued to express a belief that the imports’ expected formula pricing structure would limit upward price potential, but that idea also proved contentious.

“I think the formula pricing creates more upside,” said one contact. “If buyers come in and they see there’s not a price on something, I think they’re more likely to jump in.”

March paper trading also moved higher for the week. After reportedly trading as high as $342/st FOB early in the week, bids and offers settled in a range of $335-$338/st
FOB on Feb. 25.

The prompt NOLA barge market was quoted in a range of $330-$339/st FOB, up from $322-$335/st FOB at last report. MAP was called $335-$345/st FOB, above the previous week’s $322-$340/st FOB.

Eastern Cornbelt: The regional DAP market remained at $360-$370/st FOB in the Eastern Cornbelt, with several sources suggesting $365/st FOB as the common dealer level in late February. MAP was reported in the $370-$380/st FOB range in the region.

10-34-0 was steady at the $510/st FOB level out of most locations in the region.

Western Cornbelt: DAP continued to be quoted at $360-$370/st FOB terminals in the Western Cornbelt, with MAP $5-$10/st higher than DAP, depending on location.

10-34-0 was steady at $475-$500/st FOB in the region, with the low in Nebraska and the upper end in Iowa.

Southern Plains: Sources reported brisk movement of phosphates and potash on preplant rowcrop ground in the Southern Plains in late February, and DAP pricing appeared to be inching up. Sources quoted the Catoosa DAP market at $370-$380/st FOB, up $20/st from early February levels, with several sources quoting the market firmly at the $375/st FOB level or higher as the week progressed.

MAP was reported to be in short supply at the port, with the market quoted in a broad range at $380-$400/st FOB in late February.

10-34-0 was pegged at $475-$485st FOB in the Southern Plains, with “lots to go around at this time.”

South Central: DAP was reported in a broad range at $350-$370/st FOB out of warehouses in the South Central region, with the low reported at Blytheville, Ark. TSP was quoted at $335-$340/st FOB in the region, with the low in Memphis and the upper end in the Arkansas market.

Southeast: The Aurora, N.C., DAP market was quoted at $390-$400/st FOB, with reports that the market would likely firm to the upper end of that range as of March 1.

U.S. Export: Firming in a number of Latin American markets triggered a second consecutive week of Tampa export sales.

Mosaic announced an 18,000 mt DAP cargo for shipment into Latin America last week. The cargo netted back to $360/mt FOB Tampa, and was tabbed for March shipping.

The Gulf export market was called $360/mt based on recent sales, unchanged from the previous report.

Phosphate exports fell for the month of January, according to data released by The Fertilizer Institute (TFI). Producers shipped 113,195 st of DAP and MAP for the month, a 34.1 percent decline from the January 2015 total of 171,649 and considerably below the 204,763 st reported in December 2015.

Brazil was January’s largest buyer at 30,460 st, a 32.0 percent increase from January 2015’s 23,076. Australia was second at 27,391 st, down 0.4 percent from the year-ago 27,500 st. Coming in third was Colombia at 18,061 st, 3.2 percent above last year’s 17,506 st.

TFI traced the year’s weak start to lackluster purchasing from several countries. Canada received 13,577 st for the month, representing a 55.6 percent year-over-year decline. Mexico’s 5,058 st was down 70.9 percent from its January 2015 total, and Honduran buyers notched 76.0 percent fewer January imports at 2,630 st. Costa Rica, Ecuador, Guatemala, and several smaller markets bought zero U.S. tons after receiving a combined 33,903 st in January 2015.

The numbers represented a slow start to calendar-year 2016, a trend echoed by weakness in the fertilizer year-to-date. By that metric, 1,070,430 st of phosphates were shipped through January, 16.7 percent below the year-ago 1,284,789 st. TFI cited weak buying from both India and Brazil for the lackluster numbers.

Phosphoric acid sold to India was priced at $715/mt CFR for the first quarter, down $95/mt from $810/mt CFR in second-half 2015.

Brazil: Brazil MAP market players noted new life in the market. MAP transactions were quoted up to $360/mt CFR for the week, putting most-recent transactions in a $350-$360/mt CFR range, up from $325-$330/mt CFR at last report.

Sources said the market was only likely to move higher. “People are proud of their product right now,” said one source. “We’re seeing offers as high as $375/mt CFR. I don’t think that price has traded, but we’re probably headed for $365/mt CFR.”

One trader reported that Brazil closed a TSP deal from Morocco or Tunisia in the low $280s/mt CFR after a bit of hard-ball haggling.

Latin America: Sources reported that a number of inquiries circulated, but none of them to the liking of producers.

Bunge in Argentina reportedly bid $348-$349/mt CFR for product against offers from Russia and Morocco at $355-$365/mt CFR. Another offer closer to $370/mt CFR was made to another Argentina buyer, but was immediately rejected.

Saudi Arabia: The Saudi Arabian DAP market continued to be called in the $375-$385/mt FOB range.

China: A recent sale to Pakistan at $360/mt CFR put the netback to China at $350/mt FOB. Sources say the deal was handled by a private Pakistan company rather than the state importing arm TCP. The deal could be handled privately because Pakistan does not put restrictions on phosphate imports the same way it does on nitrogen-based material.

Reportedly the Chinese phosphate producers are slated to meet next week to discuss the low prices being offered for their product. Industry watchers say one possible result could be a call for producers to reduce output.

International traders expressed little sympathy for the producers. Traders noted that prices for DAP components are dropping. Reports of a dramatic decline in sulfur and ammonia prices indicated to traders that the break-even price for the DAP producers should also be falling.

India: The Indian government is looking at a test program in 20 districts to pay subsidies for phosphates and potash directly to farmers.

According to a government release, the Department of Fertilizer is looking to nail down details of farmers’ purchases so it can prepare a plan to pay the subsidies directly to the farmers instead of to producers or brokers.

Phosphates and potash, unlike urea, are not price controlled. Subsidies for these inputs are handled through the Nutrient Based Subsidy plan, which went into effect several years ago.

Basically, the government provides a subsidy based on the P or K content of a particular fertilizer. The idea was to wean farmers off specific fertilizers such as just DAP or MAP in favor of a more balanced input regime.

Europe: GCT is reported to have sold DAP to Spain and Italy at about $378/mt FOB. OCP is understood to have around 70,000 mt of DAP/MAP under shipment to Europe this month, with the product sold at prices ranging between $380-$400/mt FOB.

Nepal: State-run Agriculture Inputs Co. Ltd. said it is still assessing the offers received under its tender for 15,000 mt of DAP for delivery to the buyer’s warehouses. Wilson was said to have submitted the lowest offer with Chinese-origin material. The tender closed on Feb. 15 and offers are to remain valid for 21 days after tender closing.

Ammonium Sulfate

Ammonium Sulfate, China, Eastern Cornbelt, Market Watch, South Central, Southeast, Southern Plains, Western Cornbelt

Eastern Cornbelt: The ammonium sulfate market remained in a broad range at $250-$280/st FOB in the Eastern Cornbelt, with the lower numbers for imported tons and the upper end for domestic product. Delivered ammonium sulfate was quoted at the $285/st level for domestic tons in the region.

Ammonium thiosulfate was unchanged at $325-$335/st FOB in the region.

Western Cornbelt: Granular ammonium sulfate pricing in the Western Cornbelt was steady at $260-$270/st FOB regional terminals for new business.

Ammonium thiosulfate was pegged at $295-$315/st FOB in the region.

Southern Plains: Granular ammonium sulfate was steady at $240-$275/st FOB in the Southern Plains, with coarse and standard grade priced $10/st and $20/st lower than granular, respectively.

Ammonium thiosulfate was tagged at $285-$295/st FOB in the region, down $5-$10/st from last report.

South Central: Granular ammonium sulfate continued to be called $245-$260/st FOB in the South Central region, depending on location.

Southeast: The granular ammonium sulfate market was steady at $270-$280/st FOB in the Southeast, with delivered tons steady at $290/st DEL in the Carolinas, $300/st DEL in Georgia and Alabama, and $305/st DEL in Florida. Reference pricing for standard grade ammonium sulfate was unchanged at $200/st DEL in Florida. Some sources talked of a possible pricing increase effective March 1, although no actual levels were confirmed.

China: Prices for caprolactam-based ammonium sulfate appear to be holding steady at $105-$108/mt FOB. Industry watchers in Asia, however, say there could be an adjustment coming soon. Sources reported that Trammo sold a handi-sized vessel of Chinese product to Turkey for a netback of $95/mt FOB.

Ammonium Nitrate

Ammonium Nitrate, Market Watch, South Central, Southeast, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf: The last done business continued to be called $205-$215/st FOB.

Western Cornbelt: Ammonium nitrate was unchanged at $275-$280/st FOB in the Western Cornbelt.

Southern Plains: The ammonium nitrate market was quoted at $260-$270/st FOB Catoosa.

South Central: Ammonium nitrate was pegged at $265-$270/st FOB in the South Central region, up $15/st from last report.

Southeast: Ammonium nitrate remained at $295-$300/st FOB Tampa for truck tons.

Nitrogen Solutions

Eastern Cornbelt, Market Watch, South Central, Southeast, Southern Plains, U.S. Gulf, UAN, Western Cornbelt

U.S. Gulf: UAN barges continued a bullish tone last week, with prices generally quoted in the $170-$180/st ($5.31-$5.63/unit) FOB range. Most were at the higher end of the range, with product now being quoted at $180-$185/st ($5.63-$5.78/unit) FOB for the next round of business.

When prices were back in the $160s/st FOB, some sellers were very hesitant to sell, citing a perception that a lot of upriver tanks had low inventories and that buyers would have to step up soon.

In the meantime, players now called the most recent trade on the East Coast at $185/mt CFR.

Eastern Cornbelt: The UAN-28 market had reportedly inched up to $185-$196/st ($6.61-$7.00/unit) FOB in Ohio and Indiana, with UAN-32 reported in the low-$220s/st ($6.90-$6.95/unit) FOB spot river locations in the Illinois market.

Western Cornbelt: UAN-32 remained at $220-$230/st ($6.88-$7.19/unit) FOB in the Western Cornbelt.

Southern Plains: UAN-32 pricing in the Southern Plains was reportedly moving up in the wake of the firming ammonia and urea markets.

Sources quoted the low end of the market at $220/st
($6.88/unit) FOB regional production points for new business, up $20/st or more from early February, with the upper end of the regional market reported at the $230/st
($7.19/unit) FOB terminal level.

South Central: UAN-32 was pegged at $205-$215/st ($6.41-$6.72/unit) FOB in the South Central region, up $5/st from last report, with the low again reported in the Memphis market and the upper end quoted by Kentucky sources out of spot river locations.

Southeast: Sources reported rapidly firming markets for UAN in the Southeast, with sellers referencing higher replacement costs.

The week began with reports of UAN-32 in the $185/st ($5.78/unit) FOB range out of some port and inland terminals in the region. By midweek, however, spot pricing at Wilmington, N.C., had reportedly firmed to the $191/st ($5.97/unit) FOB level or higher, while reference pricing FOB Savannah, Ga., was quoted at $210/st ($6.56/unit) FOB at the upper end.

The Baltimore, Md., market had reportedly firmed as well, to $190-$195/st ($5.94-$6.09/unit) FOB from the prior week’s $180-$185/st ($5.63-$5.78/unit) FOB range.

Urea

Black Sea, China, Eastern Cornbelt, India, Indonesia, Latin America, Market Watch, Middle East, South Central, Southeast, Southern Plains, U.S. Gulf, Urea, Western Cornbelt

U.S. Gulf: The prompt granular urea market continued to be firm last week, with sources reporting new trades in the $252-$265/st FOB range. Price ideas for March and April were lower, however, with March down into the $250s/st and April falling off into the $230s/st and $240s/st.

While some players downplayed the quantity of coming imports, saying many of them had already been accounted or paid for, others estimated that some 900,000 mt of product could hit the U.S. by late April. Sources were China, Indonesia, Algeria (prill), and Arab producers.

On the prill side, price ideas have been boosted, with the most recent business put in the $240-$245/st FOB range. Quotes into March are reported to be $245-$250/st FOB, with the product reaching toward a granular equivalent – although it could meet granular on its way back down if some sources are correct.

Eastern Cornbelt: Granular urea pricing was ratcheting up, with most sources quoting the Eastern Cornbelt market at $295-$305/st FOB for new business in late February. “There is lots of discussion about the urea market structure for the next 3-4 months,” said one contact.

Western Cornbelt: The granular urea market was tagged solidly in the $295-$305/st FOB range in the Western Cornbelt, up another $10/st from last report.

Southern Plains: The granular urea market saw extremely heavy demand out of Inola/Catoosa, Okla., with sources reporting movement out of the terminal as “wide open” and suppliers struggling to keep up with demand in late February. “Product is moving out of the Tulsa market faster than it can be replenished,” said one contact.

Urea was quoted at $290-$305/st FOB at the port, up roughly $50/st from just three weeks earlier, with several sources pinning the market solidly at the $300/st FOB level as of Feb. 25.

South Central: Granular urea pricing was quoted at $290-$300/st FOB terminals in the South Central region, up a full $45-$55/st from just three weeks earlier. The low end of the range was reported FOB Memphis, and the upper end out of spot Arkansas River locations.

Southeast: Granular urea pricing was up significantly in the Southeast. Sources reported port terminals in the $290-$300/st FOB range as the week progressed, up from $270-$285/st FOB the previous week. There were reports of some suppliers eyeing a move to $310/st FOB for the next round of business.

China: Sources said traders anxious to take advantage of the hot U.S. market have booked 5-6 panamax vessels from China to NOLA. The netback on the product was pegged at $215-$220/mt FOB, with some arguing that a deal or two may have been done at $210-$215/mt FOB. The general consensus, however, is that the week closed with sales in the upper teens.

The 360,000 mt or so booked to go out would normally be considered good news. Sources note that even after those tons are loaded and gone, however, Chinese ports will still have about 800,000 mt of granular product sitting in warehouses looking for a home.

In addition to the granular urea still in warehouses, another 500,000 mt or so of prilled urea is also on hand, with no buyer in sight.

After the U.S. buying is done, sources said hopes for more sales will focus on the rains in Australia. If enough moisture hits the farm fields, sources speculated that a few buyers might step forward to place some pre-planting bids. These tons would be in addition to the cargoes already on hold for April-May shipment from the Arab Gulf. Any Chinese product sold will most likely be spot tons if the weather cooperates.

Other smaller sales might be able to take place with buyers in Asia. Sources stressed that the demand for granular product in the region is limited.

Prilled sales are not expected to start up until India comes in with a tender. The best guess is the call will not come until mid-April, after the new budget is in effect and the government has had a chance to study the supply and demand numbers one more time.

Prilled urea prices are put at a $5/mt discount to the granular product.

India: The Indian government has long been working on ways to reduce its subsidy payments for urea. The latest plan involves direct payments to the farmers.

According to media reports, the Department of Fertilizer is looking at the details of farmers’ purchases, with the idea of paying farmers the difference between the cost of the urea and the subsidized rate of $77.88/mt.

A trial plan for phosphates and potash is being planned for 20 districts. There is still no word on how the government will deal with the more contentious issue of urea subsidies. The government has so far offered subsidies to urea producers to improve output in existing plants or build new facilities, with the hope that subsidy costs will be reduced as more domestic urea hits the market.

Besides encouraging companies to build or upgrade facilities, the government had about US$5.5 billion earmarked for domestic urea subsidy payments in the current fiscal year, which ends March 31.

Domestic production is expected to be 6-8 million tons short for the next year despite the incentives to build new plants. The deficit will have to be made up with international tenders. International industry watchers said the first tender of the current season will most likely be called sometime in the middle of April. By then, said one trader, the subsidy plan will be firmly in place and the government will have a better picture of the demand by farmers.

Indonesia: Kaltim closed an auction late last week.
Dreymoor stepped in at the last minute with a bid of $231/mt FOB. The cargo is expected to go to the U.S.

Initial bids for the 30,000 mt of granular product were sub-$200/mt FOB. As the time neared for the online auction to close, no one approached the floor price of $231/mt FOB. Sources said Dreymoor pulled the trigger at the last minute to secure the cargo.

Bidding Company

US$/mt FOB

Dreymoor

231.00

Dragon

215.00

Swiss Singapore

212.00

Koch

210.00

Terra Commodities

210.00

Sources said the low bids in the auction showed how traders view the market. The auction started with prices in the upper-$180s/mt and then moved into the mid-$190s/mt FOB. One trader said the price languished under $200/mt for a while before prices moved up to the reserve price as time elapsed.

Kaltim and the other Indonesian producers have been adamant that the lowest price they would accept was $310/mt FOB. Some cargoes have left the country at a lower price, said one trader, but those were deals closed under last year’s agreements with several trading houses to facilitate exports.

Besides the Dreymoor shipment, which will be loaded in late March, sources reported that another cargo sold to Koch will be sent to NOLA by the middle of March. If the Dreymoor cargo does not load in time to meet needs in the U.S., sources said the material could easily go to Vietnam, which does not place an import duty on Indonesian urea.

Middle East: Arab producers say they are sold out for March, and traders are ready to believe them. Sources point to the many tons flowing to the U.S. with March loadings as evidence that the sold-out claims could be true.

Prices moved up in the Arab Gulf once the U.S. demand caught on. Sources report that prices in late January were in the mid-$180s/mt, and now are at $215-$220/mt FOB.

Sources said a cargo of Iranian material was sold to Italy for an early March loading for $205/mt FOB.

The price difference between the Persian and Arab product is the norm. Sources said the difference will remain until banks handling U.S. dollars feel comfortable with Iranian business. One trader said the myriad rules and regulations involving transactions with Iran have so many banks nervous of one small mistake that they have decided not to back any Iranian deals until the dust settles. Euro-based deals, however, have fewer problems than the dollar-based operators.

The Egyptian urea plants are back online. Sources said the natural gas lines, which had been damaged in an explosion a few weeks ago, have been repaired. Once the plants started getting their natural gas, production ramped up to normal levels.

With the plants back online, tenders followed. MOPCO is expected to call a tender next week. Sources said Helwan was considering scrapping its tender of Feb. 25, but now appears to have gone ahead with it.

One trader suggested Helwan was hoping to replicate the Algerian price. In the end, however, HFC failed.

Helwan offered 25,000 mt of granular for mid-March shipping. Details of the tender were still sketchy as the week ended. Sources reported 10,000 mt was picked up by a trader, but no name was forthcoming. Sources said the price for the deal came in at $245/mt FOB.

Black Sea: The rebound in the global urea market had an impact on Yuzhnyy. Sources report that the last set of prices paid out of the Black Sea port were at $205-$210/mt FOB.

Industry watchers warned, however, that this price level seems to not be the pricing idea buyers are looking for in March cargoes.

Latin America: Sources report that Brazilian buyers are looking for bargains now that U.S. demand has fired up prices.

Reportedly Brazilian importers are driving hard bargains with traders and suppliers. For now, said one trader, the Brazilians are buying hand-to-mouth, taking only what they need. He noted, however, that at some point soon demand will outpace the ability to buy just one or two cargoes to keep farmers happy.

One trader said the Brazilians are in a good position to bargain. Besides the occasional spot tons, they have monthly shipments coming in under various long-term contracts. The contracted tons are giving the buyers a small cushion of reserves to argue for lower prices from producers.

Other Latin American buyers are reportedly looking at occasional cargoes from Indonesia and China to fill in small demands here and there. Sources said demand is not strong, but will likely be steady as long as the price does not skyrocket.

Ammonia

Ammonia, Black Sea, Eastern Cornbelt, Europe, Market Watch, Middle East, North Africa, South Central, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa: The Tampa market rolled over in March to $310/mt CFR from February’s price. Sources had speculated that recent events, including increased Trinidad curtailments, U.S. exports, and Cornbelt movement, might all converge to stall out any further drop at Tampa.

There was nothing new to report at NOLA last week, but the above factors may also give that market some legs going forward.

March NYNEX natural gas closed on Feb. 25 at $1.711/mmBtu, down from Feb. 18’s $1.852/mmBtu.

Eastern Cornbelt: Sources reported a significant uptick in ammonia sales in late February, along with tightening inventories due to heavy demand in other regions. The low end of the range was reported at $435/st FOB East Dubuque, Ill., but other Illinois terminals had reportedly firmed to $450/st FOB by Feb. 25 for confirmed sales, with some speculating that spot prices will firm more in early March.

The ammonia market out of terminals in Indiana was pegged at $450-$455/st FOB, although suppliers were reportedly not taking new orders at Mt. Vernon, Ind., as the week progressed. “These farmers don’t have a clue what’s heading toward them,” said one regional contact, who noted that preplant ammonia movement should begin in Illinois and Indiana in just a few weeks, weather permitting.

Western Cornbelt: Plant outages and accelerated demand were reportedly fueling an increase in the ammonia market as the week progressed, with reports of heavy movement in central and western Missouri in late February.

Spot ammonia pricing had reportedly firmed to $410-$415/st FOB in Nebraska, $415-$430/st FOB out of Iowa terminals, and $445/st FOB Palmyra, Mo. Those levels reflect a $30-$50/st increase from last report, depending on location. The sudden increase had some sources warning of sticker shock when buyers return to the market. “Many farmers and dealers have no idea the market is moving,” said one regional contact.

Southern Plains: The Southern Plains anhydrous ammonia market appeared to be in an upward swing in late February, fueled by heavy movement on preplant corn ground, tight supply, and production allocations. Availability was the major issue in late February, with numerous locations reportedly not taking new orders or limiting truck loading.

Anhydrous ammonia pricing out of Kansas pipeline terminals had reportedly firmed from $370/st FOB early in the week to $410/st FOB by Feb. 25 for limited tons. Pricing out of regional production points had firmed dramatically as well; sources quoted a range of $375-$400/st FOB for any available tons as the week progressed, with the low at Enid, Okla.

“Some manufacturers are not offering any tons until April at this time,” said one contact. Others noted that one plant at Verdigris, Okla., was down for the next two months, and a mid-April turnaround is scheduled at Borger, Texas.

South Central: The anhydrous ammonia market was quoted at $400-$450/st FOB in the South Central region, up $20-$30/st from last report, with the low at Memphis, Tenn., and the upper end FOB Henderson, Ky., for new orders. Sources said the Henderson market had firmed from $440/st FOB earlier in the week.

Black Sea: Producers are arguing the ammonia price should be in the $270s/mt FOB, but sources say the real price is closer to $250-$255/mt FOB.

One trader noted that netback estimates from Morocco and Tampa argue for the $250-$255/mt FOB price. The only acknowledgement that a $270/mt FOB deal might have been done came as part of a deal involving top-off tons rather than a full cargo.

Industry observers said there is nothing in the marketplace that could argue for ammonia prices out of Yuzhnyy higher than $255/mt FOB. Demand is soft in Asia, and Trinidad is moving east into North Africa and northwestern Europe.

Sources said the new Mendeleevsk nitrogen project in the Tatarstan region of Russia will not impact global prices because the 480,000 mt/y ammonia output is slated for the domestic market. The facility comes online as the global ammonia market is dealing with overproduction issues and limited demand.

One trader noted that ammonia from Trinidad has begun to cut into the traditional Yuzhnyy markets of Morocco and northwestern Europe. These incursions are forcing Yuzhnyy suppliers to look east for new sales. Unfortunately for them, the soft global economy has led Asian buyers to take as few tons as possible.

Middle East: Arab producers continue to service their long-term contracts, but are facing buyers asking for the latest possible deliveries under those contracts.

Prices remain in the $270s/mt FOB even as producers claim $300/mt FOB is the going price. One trader said finding a home for $270/mt FOB ammonia is difficult, while placing $300/mt FOB material would be impossible.

Sources report that Iran is beginning to slowly move up the price of its exported ammonia to place it closer to the Arab-produced product.

Even though sanctions have been lifted from Iran, sources said finding a bank willing to deal with Iran and U.S. dollars is difficult. While many sanctions were lifted related to the Iranian nuclear program, the U.S. Congress had imposed additional sanctions on Iran for other reasons, including to punish the country for its support of terrorist organizations. Working through the maze of what is and isn’t allowed, according to one European trader, has left some U.S. banks extremely anxious over trying to deal with Iran.

Sources said euro-based deals, on the other hand, face fewer limitations. Even if European banks become willing to finance ammonia deals from Iran, sources said the amount available is limited because of domestic demand and steady business with India.

Freight costs have come down, allowing some suppliers to snap up better netbacks on fixed price sales. Sources said the long-term nature of securing vessels for ammonia means ship owners have not felt the same pain as shippers of dry commodities such as urea and phosphates. That could change by the end of this year, however, according to one trader.

New vessels are slated to come into operation during the fourth quarter of this year. Many of those ships already have long-term charters attached to them as soon as they leave the construction ports. The older vessels will most likely be turned over to spot market vendors. The end result could be even lower shipping costs by the end of the year.

Europe: Demand is steady, sources said. Buyers have begun to look at sources other than Russia in recent times. Reportedly PCS sent two cargoes from Trinidad to Antwerp, with more planned.

The aggressive entrance of Caribbean ammonia into Europe is bad news for Russia, which will now have to look to the east for its sales.

For the Europeans, sources said the benefit is mostly just having another source of material. Reportedly, the price has not shifted notably from what they pay from Yuzhnyy or the Baltic ports.

North Africa: OCP in Morocco has been aggressive in trying to force Yuzhnyy suppliers to lower their prices. The latest shot across the bow came when OCP took delivery of a cargo from Trinidad.

The Moroccans have been steady in their demand for lower prices, while the Yuzhnyy suppliers have turned a deaf ear.

Sources said shipments from the Caribbean will not be able to fully supply Morocco with the product it needs, but the shift in sourcing is expected to place more pressure on the Black Sea suppliers to lower their prices.