Potash Corp. of Saskatchewan Inc. reported a 38 percent drop in second-quarter net income, to $522 million ($0.60 per diluted share) on sales of $2.4 billion, down from the year-ago $840 million ($0.96 per share) on sales of $2.32 billion. The company said it had record second-quarter earnings before a $341 million ($0.39 per share) non-cash impairment charge relating to its investment in Sinofert Holdings Ltd. It also had a $29 million impairment related to its phosphate segment, included in cost of goods sold.
“Although certain notable items reduced our reported earnings, the second quarter highlighted the underlying strength of our business,” said PotashCorp President and CEO Bill Doyle. “The acceleration in potash demand that took hold at the end of the first quarter allowed us to deploy our capacity, delivering strong results and creating value for our shareholders.”
Offshore potash volumes set a quarterly record of 1.95 million mt, up from the year-ago 1.69 million mt. Offshore prices were up, at $411/mt from $379/mt. Total potash shipments were up slightly, to 2.61 million mt ($433/mt) from 2.52 million mt ($416/mt), while North American shipments were off 22 percent, at 651,000 mt ($502/mt) from 831,000 mt ($492/mt).
Second-quarter potash margins were up, at $801 million on sales of $1.18 billion from the year-ago $793 million on sales of $1.12 billion.
Nitrogen gross margins were up 44 percent, to $302 million on sales of $642 million versus the year-ago $209 million and $571 million, respectively. Nitrogen volumes were about level at 1.3 million mt ($436/mt) from the year-ago 1.299 million ($400/mt). Urea saw a run up in volumes and price during the quarter (see table below). The average natural gas price for the quarter was $5.31/mmBtu – lower than the year-ago $6.21/mmBtu, but higher than that paid by the company’s North American competitors.
Phosphate margins were off 42 percent, to $96 million on sales of $569 million from the year-ago $166 million on sales of $633 million. While phosphate sales volumes were down at 936,000 mt ($552/mt) from 1.01 million ($578/mt), it came from the fertilizer side of the business, where volumes dropped to 619,000 mt ($498/mt) from 696,000 mt ($562/mt), while feed/industrial were level at 317,000 mt. Prices in feed/industrial were up at $656/mt from $611/mt.
Six-month net income was off 36 percent, to $1 billion ($1.16 per share) on sales of $4.14 billion from the year-ago $1.57 billion ($1.79 per share) on sales of $4.53 billion.
Six-month potash margins were off 27 percent, to $1.13 billion on sales of $1.77 billion from the year-ago $1.54 billion on sales of $2.23 billion. Six-month volumes were down across the board at 3.85 million mt ($434/mt) from 5.31 million mt ($390/mt), with the biggest drop in North America, to 1.05 million ($500/mt) from 1.92 million mt ($455/mt). Offshore were down, at 2.8 million mt ($409/mt) from 3.39 million mt ($353/mt).
Six-month nitrogen margins were up, at $521 million on sales of $1.19 billion from the year-ago $412 million and $1.12 billion. The average gas cost was $5.03/mmBtu, down from $6.02/mmBtu. Nitrogen volumes were down slightly, to 2.59 million mt ($410/mt) from the year-ago 2.64 million ($384/mt).
Six-month phosphate margins were down to $248 million on sales of $1.18 billion from the year-ago $316 million on sales of $1.18 billion. Six-month volumes were more in balance with the total at 1.87 million mt ($579/mt), down from 1.91 million mt ($569/mt). Fertilizer volumes were down slightly at 1.26 million ($534/mt) from 1.3 million ($553/mt), while feed/industrial was up slightly at 610,000 mt ($670/mt) from 606,000 mt ($603/mt).
The cost estimate is now C$2.2 billion, up from the earlier C$1.7 billion. The company said this project, which includes developing a new ore body, more closely re
U.S. Gulf/Tampa: Yara concluded August business with major customers at the $690/mt DEL mark, which was a rollover of the company’s July business. To date, no other trades have been reported, putting the current range at a flat $690/mt.
May ammonia imports into the U.S. were off 14 percent, according to the U.S. Department of Commerce, at 559,170 st from the year-ago 652,381 st. July-May imports are off 8 percent, to 6.5 million st from 7.1 million mt.
Eastern Cornbelt: Anhydrous ammonia remained at $740-$760/st FOB regional terminals, with the common price in Illinois quoted at the $750/st FOB level.
Corn conditions continued to fall due to heat and drought stress. As of July 22, only 7 percent of the corn in Illinois and Indiana was rated as good or excellent, compared with 15 percent in Ohio. Poor or very poor ratings were assigned to 72 percent of Indiana’s corn crop last week, compared with 66 percent in Illinois, and 52 percent in Ohio. Nationally, USDA placed just 26 percent of the corn crop in the good or excellent categories last week, with 45 percent rated as poor or very poor.
Soybeans were also suffering, with good or excellent ratings assigned to just 12-13 percent of the acreage in Indiana and Illinois, and 20 percent in Ohio. Some 49-53 percent of the soybeans in Indiana and Illinois were rated as poor or very poor last week, compared with 44 percent in Ohio. USDA rated 31 percent of the soybeans nationally as good or excellent as of July 22, with 35 percent of the crop called poor or very poor.
Western Cornbelt: The anhydrous ammonia market remained at $720-$750/st FOB regional terminals. Effective July 20, Agrium’s ammonia postings in the Leal/Beulah sales area in North Dakota firmed again, moving to $825/st FOB and $845/st DEL. Those levels were up $45/st from Agrium’s July 13 list prices in that location.
Crop quality continued to deteriorate due to drought. As of July 22, just 5 percent of Missouri’s corn crop was rated as good or excellent, compared with 23 percent in Iowa and 37 percent in Nebraska. Fully 79 percent of Missouri’s corn fell in the poor or very poor categories last week, along with 33-40 percent of the acreage in Nebraska and Iowa.
As for soybeans, just 7 percent of Missouri’s crop was rated as good or excellent last week, with 68 percent in the poor or very poor categories. In Iowa and Nebraska, 28-30 percent of the soybeans were rated as good or excellent as of July 22.
California: Anhydrous ammonia remained at $745/st DEL in California from Calamco, with aqua ammonia referenced at the $200/st FOB mark. Agrium’s truck-delivered anhydrous ammonia postings in California moved on July 1 to $745/st in Central California and $750/st in Northern California.
California sources gave favorable reports for cotton, rice, corn, hay, almond, and fruit and vegetable crops last week. Rain and cooler temperatures settled over much of California at mid-month, but hot, dry weather returned to the central, southern, and desert areas of the state last week.
Pacific Northwest: Effective July 20, Agrium’s anhydrous ammonia postings moved to $860/st rail-DEL in Oregon, Washington, and northern Idaho; $880/st truck-DEL in northern Idaho and Oregon and Washington east of the Cascades; $885/st rail-DEL in southern Idaho and Utah; and $910/st truck-DEL in Montana and northern Wyoming from the company’s plant in Carseland, Alberta. Those reference prices were up $40/st from Agrium’s July 13 ammonia postings at those locations.
Agrium’s aqua ammonia postings in Washington moved on July 20 to $215/st FOB Central Ferry and Kennewick, a $10/st increase from the company’s July 13 aqua postings at those locat
U.S. Gulf: Prompt barges prices moved up last week, but again retreated. A broad range was once again reported, this week at $445-$465/st. The most recent trades were put around the $450/st FOB mark.
While an early fall application season is anticipated with good demand, the drought has thrown a monkey wrench into those plans. Low water levels may mean problems getting product upriver, and sources continue to worry over the continuation of the drought. “You cannot fertilize a concrete pad,” said one. Another noted that some 1 million st of urea is headed toward the U.S. over the next few months, as the NOLA market is currently the premium priced market for global urea. All of this could back up at the Gulf if barge problems persist and/or get worse.
May urea imports were up 29 percent, to 561,178 st from the year-ago 436,611 st, according to DOC. July-May imports, however, were about level with year-ago, at 6.36 million st versus 6.38 million mt.
Eastern Cornbelt: The granular urea market was quoted at $500-$515/st FOB in the Eastern Cornbelt.
Western Cornbelt: Most sources quoted the granular urea market at the $500/st FOB level or slightly less out of regional terminals last week. Many locations in the Western Cornbelt were out of product.
Agrium’s granular urea postings moved on July 20 to $550/st FOB Marion, S.D., and North Dakota warehouses at Alton, Carrington, Colfax, and Scranton; and $555/st DEL in Minnesota, Wisconsin, and the Dakotas. Those levels reflect a $25/st increase from Agrium’s July 13 urea postings in those locations.
California: Central Valley sources pegged the granular urea market at $580/st FOB, with some discounts available. Effective July 1, Agrium’s granular urea postings in California moved to $580/st FOB West Sacramento; $590/st FOB Hanford and Richvale; $615/st truck-DEL in Central California; $625/st truck-DEL in Northern California; and $635/st truck-DEL in desert areas of California.
Pacific Northwest: Sources quoted the granular urea market at $530-$540/st FOB in the region on the low end last week. Effective July 20, Agrium’s granular urea postings moved to $550-$560/st DEL in Montana and Wyoming, depending on location; $565/st FOB West Woodburn, Ore.; $570/st FOB Pella, Idaho, and Washington warehouses at Glade, Warden, Moses Lake, Plymouth, and Wilson; $575/st DEL in Washington, Idaho, northern Nevada, the Klamath Basin, and Oregon; $585/st DEL in northern and central Utah; and $590/st DEL in southern Utah. Those levels were up $25/st from Agrium’s July 13 postings at those same locations.
Western Canada: Granular urea pricing was pegged at $630-$635/mt DEL in Manitoba, $635-$640/mt DEL in Saskatchewan, and $640-$655/mt DEL in Alberta.
India: By the middle of last week, IPL settled deals that officially came to 1.19 million mt. Sources say that amount includes a +/- 10 percent range from many of the suppliers.
The last count put together from Green Market’s sources put the total take at 1.14 million mt. The tally is below. ,
U.S. Gulf: Recent barge trades continued to be called $335-$345/st FOB. Domestic price ideas were called $345/st FOB.
Imports were up 49 percent in May, to 76,443 st from the year-ago 51,343 st. July-May imports are up 2 percent, to 694,772 st from 681,645 st.
Western Cornbelt: Ammonium nitrate pricing in the Western Cornbelt was pegged at $435-$450/st FOB, down slightly from last report.
California: No current prices were reported for ammonium nitrate in California.
CAN-17 remained at $290-$310/st FOB in California, depending on location, with some supply outages reported in the state in July. Reference prices for AN-20 in California included $325/st FOB from Calamco and $345/st truck-DEL from Agrium.
Pacific Northwest: No current prices were reported for ammonium nitrate in the Pacific Northwest. Effective July 20, Agrium’s AN-20 posting moved to $260/st FOB Kennewick and $270/st rail-DEL in Washington, Oregon, Idaho, Montana, Wyoming, Utah, and Nevada. Those levels reflected a $4/st increase from Agrium’s July 13 AN-20 postings.
Eastern Cornbelt: Ammonium sulfate remained at $375-$400/st FOB in the Eastern Cornbelt region.
Western Cornbelt: Granular ammonium sulfate remained at $375-$400/st FOB in the Western Cornbelt. Sources were still waiting for a fill program at lower prices, but nothing was announced at press time.
Agrium’s granular ammonium sulfate postings firmed on July 20 to $425/st rail-DEL in North Dakota, Minnesota, and Wisconsin, up $50/st from the July 6 reference price.
Ammonium thiosulfate was pegged at $360-$375/st FOB in the Western Cornbelt.
California: The ammonium sulfate market remained at $370-$400/st FOB, depending on grade and supplier. IRM’s postings FOB Chico, Calif., included $380/st for Western Standard and $400/st for Western Premium and Transform ammonium sulfate.
Pacific Northwest: Agrium’s granular ammonium sulfate postings moved on July 20 to $420/st FOB and $425/st DEL in Washington, Idaho, Oregon, Utah, and Nevada. In Montana and Wyoming, the posting moved to $425/st DEL. Those prices were up $50/st from Agrium’s July 6 ammonium sulfate postings at those locations.
Effective July 12, IRM’s ammonium sulfate postings for Washington, Oregon, Idaho, and Montana moved to $365/st FOB and $375/st DEL for Tranzform and Western Premium ammonium sulfate, and $325/st FOB and $335/st DEL for Western Standard ammonium sulfate.
Western Canada: Granular ammonium sulfate prices increased on July 20, moving from $405-$410/mt up to $480-$485/mt DEL in Western Canada.
Tampa: On July 26, PotashCorp settled at $170/lt for molten delivered to Tampa for the third quarter, down $10/lt from the second quarter. Mosaic had settled the previous week at the $170/lt level for the third quarter as well. The change is posted in this week’s price index.
Refinery operating capacity continued to be very high last week, according to the Department of Energy. The operating rate was up 1 percent, from 92 percent to 93 percent. One reason for the high operating rate was that the DOE had removed some refineries from the formula which were no longer producing.
U.S. Gulf: Prices were in the $180-$185 range for prill exports.
U.S. Imports: May imports were up 12 percent, to 183,370 st from the year-ago 163,170 st. July-May imports were off 1 percent, to 2.15 million st from 2.18 million st.
Vancouver: Prices were down $15-$20/mt FOB at Vancouver for domestic purchases. Export contracts were still in the $180-$200/mt FOB range.
Benelux: The current price range was $212-$220/mt FOB.
U.S. Gulf: Barge prices continued to shoot up last week. While the market appears uncertain and volatile on urea, higher UAN numbers appeared to be a firmer proposition. Could it be that liquids sound better in a time of drought?
The latest trades were reported at $315-$320/st ($9.84-$10.00/unit) FOB. However, sources said seller price ideas had quickly moved up, and that the next trade could well be somewhere in the $330-$345/st ($10.31-$10.78/unit) FOB range.
May imports were up 26 percent, to 415,336 st from the year-ago 330,768 st. July-May imports were up 2 percent, to 3.34 million st from 3.26 million st.
Eastern Cornbelt: UAN pricing had moved up on the basis of higher replacement costs. UAN-28 was quoted at $325-$330/st ($11.61-$11.76/unit) FOB in the Ohio market, with the low out of river terminals and the upper end inland. Indiana sources said UAN-28 pricing had firmed from $300/st ($10.71/unit) to $310/st ($11.07/unit) FOB for new sales. Illinois sources pegged the UAN-32 market at the $360/st ($11.25/unit) FOB level last week.
Western Cornbelt: The UAN-32 market was quoted in a broad range at $340.80-$360/st ($10.65-$11.25/unit) FOB regional terminals, with the low reported in Iowa and the upper end in the Missouri market on a spot basis.
California: The UAN-32 market in California had reportedly slipped to $355-$380/st ($11.09-$11.88/unit) FOB terminals, depending on location and supplier, with rail-delivered tons pegged at the $370/st ($11.56/unit) level in the Central Valley. The low end reflected new postings that took effect July 16 from one regional supplier.
Pacific Northwest: Agrium announced another UAN-32 increase on July 20, with prices firming $15/st from July 13 reference levels.
As a result, UAN-32 postings moved on July 20 to $415/st ($12.97/unit) rail-DEL in Washington, northern Idaho, and Oregon excluding Malheur County; $420/st ($13.13/unit) rail-DEL and $425/st ($13.28/unit) truck-DEL in Nevada, Utah, southern Idaho, and Oregon’s Malheur County; and $420/st ($13.13/unit) rail-DEL and $435/st ($13.59/unit) truck-DEL in the Klamath Basin. In Montana and northern Wyoming, Agrium’s postings moved on July 20 to $365/st ($13.04/unit) DEL for UAN-28 and $425/st ($13.28/unit) DEL for UAN-32.
Western Canada: UAN-28 was quoted at $404-$407/mt ($14.43-$14.56/unit) DEL in Manitoba, $407-$410/mt ($14.56-$14.64/unit) DEL in Saskatchewan, and $410-$419/mt ($14.64-$14.96/unit) DEL in Alberta.
Central Florida: Along with most of the U.S., the eastern portion of the country continued to suffer under drought conditions last week, but the region was faring much better than the Midwest. Georgia was the hardest hit, according to the U.S. Drought Monitor, with drought conditions there ranging from extreme to exceptional.
The drought has put a damper on phosphate sales, at least on a spot basis, but that has not been a problem for producers, who had low inventories anyway.
PotashCorp’s White Springs facility, which produces MAP in northern Florida, had returned to normal production levels last week after being shut down in late June due to flooding and a power outage during Tropical Storm Debby. MAP shipments had resumed.
The DAP price for Central Florida was unchanged last week at a flat $500/st FOB. Both CF and Mosaic were listed at $500/st FOB. MAP continued to sell at a $20/st premium to DAP in Central Florida, about the same difference as from traders. PCS Sales was selling at prices comparable to the market.
U.S. Gulf: Some portions of the Midwest, including parts of Wisconsin, Illinois, and Indiana, received rain last week, but the damage to crops in drought-stricken areas was already significant.
Nearly the entire country was experiencing some stage of drought in late July, according to the July 24 U.S. Drought Monitor, with conditions ranging from abnormally dry to exceptional drought. Only Washington, Maine, and Florida were relatively drought-free last week.
To further complicate the situation, low water levels on the Lower Mississippi River made it difficult – if not impossible – to unload NOLA DAP barges. The low water levels were forcing some owners of NOLA phosphate barges to make a choice between paying demurrage fees or selling the product to someone with an upriver loading site at low prices. That had a significant impact on the price range.
One trader who was looking to get out of paying demurrage got rid of a NOLA DAP barge at $500/st FOB. Transactions on the Arkansas River, however, were done as high as $512/st FOB.
Prices for 2012 corn futures were mixed last week compared to the previous week, although all prices remain quite high. The corn price for December was $7.8375/bushel, down slightly from $7.8675/bushel a week earlier. The corn price for December 2013 was $6.23/bushel, increasing from $6.1875/bushel the previous reporting period. For November 2012, soybeans fell to $15.985/bushel from $16.52/bushel the previous week, and beans for November 2013 dropped to $12.6625/bushel from $13.135/bushel a week earlier. Wheat for July 2013 fell to $8.1125/bushel from $8.32/bushel the week before, and wheat for July 2014 was listed at $7.4475/bushel last week, down from $7.465/bushel the previous week.
Mississippi Phosphates was running last week, and the plan was for most of its output to go into the domestic market. MAP was said to be in short supply last week, and prices for both OCP brown and domestic were running around $535/st FOB.
The prompt NOLA DAP barge price for the week meandered a bit and hit a range of $500-$512/st FOB, which was unchanged from the previous week. MAP was running $25-$35/st FOB higher than DAP, with several deals done at $535-$538/st FOB.
Eastern Cornbelt: DAP was pegged at $545-$565/st FOB regional warehouses, with MAP quoted at $560-$580/st. An Indiana source reported booking fall tons recently at $558/st DEL for DAP and $565/st FOB for MAP.
Several sources said they had ordered quite of bit of their fall tonnage, but, as one Indiana source said, dealers are “not filling to the level we would if we didn’t have crop troubles.” Uncertainties remain about the fall fertilizer season.
U.S. Gulf: While many sources last week were not really thinking much about potash, others were. Sources said a rush of large quantity buying occurred around July 20, give or take a day or two. Large river buyers reportedly jumped into the market to pull product for $450-$460/st FOB for August/September. This is down from the approximate $465-$475/st FOB range that has generally been discussed for the last few months.
The price drop came at a time when North American producers had been hoping to boost prices some $20/st. Instead, at least on the barge market, they went down by that amount. ICL was tabbed as supporting these lower numbers, as well as one North American producer.
Muriate of potash imports were off 37 percent in May, to 803,539 st from the year-ago 1.27 million mt. July-May imports were off 27 percent, to 8.34 million mt from 11.35 million st.
Eastern Cornbelt: Potash continued to be quoted in the $500-$510/st range FOB regional warehouses. One source said he booked some fall fill before the July 20 pricing increase at $505/st rail-DEL. Granular potash postings from PCS Sales firmed $20/st on July 21, moving to $530/st FOB warehouses in Illinois, Indiana, and Ohio. Source said the new levels were untested, however.
Western Cornbelt: Potash continued to be quoted in the $500-$510/st FOB range in the Western Cornbelt region. Although a $20/st increase on July 21 from some producers pushed reference prices up to the $530/st FOB mark, sources reported no new business to test that level.
California: Sources tagged the potash market at $570-$582/st FOB and $590-$600/st DEL in California. The delivered range was up from last report based on new postings that reportedly took effect July 21, but sources reported no new sales to test the higher reference prices.
Sulfate of potash (SOP) was unchanged at $695-$705/st FOB in California, and potassium nitrate remained at $1,020/st FOB for bulk tons and $1,090/st FOB for bags.
Pacific Northwest: Agrium’s potash postings moved on July 1 to $530/st FOB and $540/st rail-DEL in Southern Idaho, Utah, and Oregon’s Malheur County; $535/st FOB and $545/st rail-DEL in Washington, the Idaho panhandle, and Oregon excluding Malheur County and the Willamette Valley; and $540/st FOB and $550/st rail-DEL in Oregon’s Willamette Valley.
Western Canada: The potash market to Canadian customers FOB Saskatchewan mines remained in the $530-$540/mt FOB range. Out of regional warehouses in Western Canada, the dealer market was quoted at $545-$561/mt FOB, depending on grade and location.
Brazil: While major sellers are seeking $550/mt DEL for granular, up from the earlier $520/mt DEL, both Mosaic and PotashCorp have told analysts that prices have not quite made the entire jump. They are hopeful it will as demand in Brazil continues to ramp up this fall.
Mississippi Phosphates Corp. reported that it’s Pascagoula, Miss., facility, began initial restart activities Friday, June 8, after following a thorough safety inspection. It hopes to regain full production early this week.
Miss Phos has retained Engineering Systems Inc. (ESI) to participate in the safety inspection and to assist in the ongoing investigation of the tragic incidents of May 21 and June 1. In total, two individuals were killed and another two injured in the incidents. Miss Phos said the start-up was scheduled after the company received input from ESI and the federal Occupational Safety and Health Administration (OSHA). Miss Phos said it is cooperating fully with OSHA whose inquiry is continuing. It also continues to work with ESI.
Miss Phos is a Delaware corporation with its executive offices in Madison, Miss. It owns and operates a DAP manufacturing complex in Pascagoula, Miss. Miss Phos is owned by Phosphate Holdings Inc.
