All posts by hlancey@bloomberg.net

Landus Plans New Agronomy/Grain Site in Iowa

News, News Briefs, U.S.

Landus, Iowa’s largest farmer-owned cooperative, announced on Aug. 3 that it has purchased land and assets along Highway 169 in Iowa for the construction of a grain and agronomy facility located centrally between the towns of Ft. Dodge, Humboldt, Badger, and Clare.

Landus said the decision to purchase the site, which was formerly owned and operated by Sparboe Companies, was made in response to feedback from local farmers desiring a centrally located agricultural hub. Details about the site’s construction timeline and projected storage capacity were not disclosed.

“At Landus, our focus first and foremost is on the needs of the farmer, and to provide what the farmer is asking for,” said Matt Carstens, Landus President and CEO. “The decision to invest here was driven entirely by feedback from the farmers in that region who have been demanding more. We have heard them, and we are excited to bring our Landus offerings to this area and continue to put our farmer-owners at the center of everything we do.”

Parrish & Heimbecker to Expand Blending Capacity

Canada, News, News Briefs

Canadian agri-business Parrish & Heimbecker Ltd. announced on Aug. 2 that it is constructing a new fertilizer blending facility at its Amberly, Ont., location. The 4,000 mt blending warehouse, which will have faster blending and loadout speeds of 270-300 mt/hour and a faster receiving speed of 180 mt/hour, is expected to be ready for the 2024 crop season.

“At Parrish & Heimbecker, we continuously strive to grow and adapt to meet the evolving demands of our valued customers,” said Darryl Markle, Director Eastern Operations. “This new blending facility in Amberley, along with other upgrades and additions in our Eastern Region, represents our commitment to our customers, their communities and the economy.”

Russia to Implement 8% Fertilizer Export Duty

News, News Briefs, Phosphate, Russia

Russia plans to introduce an 8% duty on the export of all types of fertilizers from Sept. 1 through Dec. 31, 2024, according to an Interfax report this week, citing a government resolution drafted by the Finance Ministry and notes posted on the regulation.gov.ru website.

Russia had implemented export duties at a flat rate of 23.5% on all types of mineral fertilizer export sales priced above $450/mt FOB, effective Jan. 1, 2023 (GM Dec. 9, 2022). For fertilizers priced up to a maximum of $450/mt FOB, the rate of duty is zero. The duties had been set to remain in place through Dec. 31, 2023.

Russian fertilizer producers, notably PJSC PhosAgro, had petitioned the government to adjust the parameters of the export duties implemented on fertilizers from Jan. 1 this year by reducing the price cut-off level (GM Jan. 20, p. 26).

Since the start of the year, the prices of nitrogen and potash fertilizers, which account for more than 60% of Russian fertilizer exports, fell below the $450/mt FOB cut-off price. As a result, according to the report, revenues from the duty amounted to only about RUB6 billion (approximately at $64.3 million current exchange rates).

Furthermore, prices of phosphate fertilizers, except for MAP, and complex fertilizers have also subsequently fallen below the benchmark price, and, according to the sources, the duty effectively has ceased to work.

The Finance Ministry had expected to collect some RUB120 billion from the country’s fertilizer industry under this year’s budget, and the decision to remodel the export duty mechanism has come in order to achieve this budget target. According to the report, citing unnamed sources familiar with the matter, the new measure is expected to raise some RUB87 billion from fertilizer producers for the budget.

According to the report, Russia’s Finance Ministry had also considered an increase in the Mineral Extraction Tax (MET) as well as the introduction of an excise tax on gas. However, fertilizer producers argued against these proposals, saying a further increase in the MET would make it necessary to reduce the extraction of raw materials for the production of fertilizers.

Producers were also opposed to an excise tax on gas, saying this would make the production of a number of nitrogen fertilizers, including ammonium nitrate, unprofitable under current market conditions.

In tandem with the revision of the export duty, the Russian government also plans to replace the current fertilizer export quotas system with export licenses, according to the report, but details are few. These export licenses could be revoked if a company fails to fulfil its obligations to supply the domestic market.

Russia first introduced quotas for the export of nitrogen and complex fertilizers on Dec. 1, 2021, as one of the measures to ensure the domestic market had sufficient supply of fertilizers (GM Nov. 5, 2021). The export restrictions have been extended several times since then.

Most recently, in late May the Russian government green-lighted an extension of quotas on the export of nitrogen fertilizers and certain other fertilizer products for the period June 1 through Nov. 30, 2023 (GM June 2, p. 1). The total volume of export quotas for this period is more than 16.3 million mt.

Ma’aden, PIF to Buy 10% Stake in Vale Base Metals

News, News Briefs, Saudi Arabia

Saudi Arabian Mining Co. (Ma’aden) and the Kingdom’s Public Investment Fund (PIF), via their Manara Minerals Investment Co. joint venture, have signed a binding agreement to acquire a 10% stake in Brazilian group Vale SA’s Base Metals Ltd. unit, which produces nickel and copper.

The transaction is based on an enterprise value of $26 billion, Ma’aden said in a July 30 filing to Saudi’s Tadawul bourse. The deal, which is subject to regulatory approvals and other conditions, is expected to be completed in the first quarter of 2024.

“Vale has projects in world leading mining jurisdictions including Canada, Brazil, and Indonesia,” Ma’aden said. “Manara’s investment into Vale will play a key role in helping it expand the production of copper and nickel across its asset portfolio, which are critical to the development of new technologies that will benefit the global energy transition.”

Ma’aden, which operates several extraction sites and mines in Saudi Arabia to produce gold, copper, iron ore, strategic minerals, and phosphates, has a 51% stake in Manara, while the PIF holds a 49% interest. In June, Ma’aden said it would be increasing its share capital by SAR12.3 billion (approximately $3.27 billion at current exchange rates) to strengthen its capital base to boost growth.

Vale SA also reached a separate agreement on July 27 to sell a further 3% interest in its base metals unit to US investment firm Engine No. 1, according to media reports. The deals with Ma’aden and the US investment firm are part of Vale’s strategy to improve the management of nickel and copper assets, given expectations of soaring demand for the metals from the electric vehicle market.

Verdesian Life Sciences – Management Brief

Management Briefs

Specialty crop input producer Verdesian Life Sciences, Cary, N.C., announced on July 27 that Clare Doyle will be the company’s new CEO, effective in mid-August. She will replace interim CEO Fred Lynch, who will assume the position of Verdesian Board Chairman upon this transition.

Verdesian said Doyle brings more than 35 years of experience across a variety of industries, most recently serving since October 2021 as Chief Sustainability Officer for Masonite International. Prior to that, she was the Senior Vice President and General Manager-Masonite Europe, where she led the transformation of Masonite’s businesses in the region.

Before joining Masonite in 2016 as Senior Vice President and Business Leader – Components, Doule was with Elementis PLC from 2010-2016, culminating in the role of Vice President of Marketing. Prior to that, she spent 11 years with Rohm and Haas Co. in various roles in Electronic Materials, Architectural & Functional Coatings, and Corporate Development.

Doyle earned a bachelor’s degree in electrical engineering from Tulane University and an MBA from Columbia University. She also holds a Sustainable Capitalism Certificate from Berkeley Law Executive Education.

Ammonia

Ammonia, Black Sea, Commodities, Eastern Cornbelt, Geo Region, India, Market Watch, Middle East, Northern Plains, Northwestern Europe, U.S., U.S. Gulf, Western Cornbelt

US Gulf/Tampa:

Tampa ammonia remained at $295/mt CFR for August, up $10/mt from July’s $285/mt CFR. The August increase also pushed up the Gulf Coast truck market by $10/st, to $270-$280/st FOB from the prior low of $260/st FOB.

Eastern Cornbelt:

Ammonia prices remained at $465-$485/st FOB in the Eastern Cornbelt for prompt or prepay tons, with the high reported in Indiana and Ohio.

Western Cornbelt:

The ammonia market was quoted at $440-$475/st FOB in the Western Cornbelt, with the low confirmed at Hoag, Neb., and the high at Palmyra, Mo. Most Iowa terminals fell in the $440-$470/st FOB range, with the lower numbers out west. The Fort Dodge, Iowa, market was pegged at $440-$450/st FOB in early August.

Ammonia pricing in the Southern Plains was reported at $385-$425/st FOB, with the low at Pryor, Okla., and the high reported at Verdigris, Okla.

Northern Plains:

Ammonia pricing was quoted at $475/st FOB and DEL in the Northern Plains, reflecting the most recent prompt or prepay offers from producers.

Black Sea:     

Ammonia offers into Turkey are now coming at $320-$340/mt CFR. Those prices are being met with serious pushback from buyers, however, some of whom are reportedly looking to Iran to push down prices.

Turkey has regularly purchased Iranian material, but not in large numbers. Turkish buyers bought 32,000 mt of Iranian ammonia in 2022 against total imports of almost 800,000 mt for the year, according to Trade Data Monitor.

Turkey imported 434,000 mt in January-June 2023, up 28% from the year-ago 339,000 mt. Egypt sent 85,000 mt, while Libya and Oman accounted for another 58,000 mt each. Trinidad and Tobago added 46,000 mt.

June imports were reported at 39,000 mt, down from 50,000 mt in June 2022. Trinidad accounted for 59% of the market with 23,000 mt. Second-quarter imports totaled 236,000 mt, up 68% from 141,000 mt in April-June 2022.

India: 

FACT has reportedly backed away from further import calls, claiming its needs can now be covered by its own facilities. The move seems like a tactic to push back against the high ammonia prices being offered by international traders, one trader said.

India’s last reported spot ammonia deal was reported at $350/mt CFR in late July. The bulk of the shipments into India fall under long-term contracts with substantial discounts to the buyers.

Middle East: 

Producers claim to be sold out for August. Talks for September tons appeared to show limited spot availability from Oman and a few other countries in the Arab Gulf.

The lack of any new spot deals left the ammonia price at an estimated $290-$300/mt FOB. However, with September purchase talks underway, traders said the steam for higher prices seems to have run out. One trader noted that any business going west of the Suez Canal will have to show a netback no higher than $250/mt FOB.

Fertial is reportedly in final talks with traders to make awards following a selling auction for ammonia out of Algeria. At the same time, sources said AOA sold a cargo at $280-$300/mt FOB.

Northwest Europe:  

Some European ammonia producers are slowly coming back online while also keeping their options open for more imports. Fluctuations in the natural gas market have led producers to fill their needs on a hand-to-mouth basis.

So far, the third quarter looks steady enough for European production to continue, sources said. Uncertainty looms for the fourth quarter, however, despite strong reserves of natural gas.

If the winter is too harsh, ammonia producers figure they will have to accept cutbacks in gas supplies to ensure enough gas is available for domestic use. If the upcoming winter is similar to the previous one, sources said, both consumer and industrial needs should be met without much trouble.

Urea

Black Sea, Brazil, China, Commodities, Eastern Canada, Eastern Cornbelt, Geo Region, India, Indonesia, Market Watch, Middle East, Northeast, Northern Plains, Pakistan, U.S. Gulf, Urea, Western Cornbelt

US Gulf:

NOLA urea barges once again covered a broad range for the trading week, but prices were up from last week’s $355-$425/st FOB.

After reaching a reported high of $445/st FOB for prompt tons late on July 28, new trades slipped to $400-$415/st FOB for August-September business on July 31 and Aug. 1. Another drop on Aug. 2-3 pushed the market to a low of $375-$395/st FOB for August-September business, with the focus reportedly on September tons as the week came to a close.

Eastern Cornbelt:

Urea prices firmed to $450-$480/st FOB in the Eastern Cornbelt, up another $20-$25/st from last week, with the low confirmed at Cincinnati, Ohio, and the high at river terminals in Illinois. Pricing out of Michigan warehouses jumped to $525-$535/st FOB during the week.

Western Cornbelt:

Urea strengthened to $450-$470/st FOB in the Western Cornbelt, up another $10-$20/st from last week, with the low confirmed at St. Louis, Mo.

Northern Plains:

Urea prices were reported at $475-$485/st FOB St. Paul, Minn., with delivered tons firming to a broad $485-$525/st range in North Dakota, depending on location and point of origin.

Northeast:

The urea market was quoted at $475-$490/st FOB in the Northeast, with the upper end also reported for delivered tons in Pennsylvania. Sources reported very tight supplies at Fairless Hills, Pa., and Baltimore, Md.

Eastern Canada:

Urea firmed to C$705-$770/mt FOB for the latest offers in Eastern Canada, up from C$615-$660/mt FOB in early July.

India: 

The urea market has gone quiet as traders contemplate the price increases that followed the Indian Potash Ltd. (IPL) tender announcement. The tender will close Aug. 9. Sources said they expect to see prices significantly above India’s last tender. IPL is expected to try to purchase 1.5 million mt of urea.

So far, prices seem to be focusing on $410-$415/mt CFR based on the current Arab Gulf price and expectations reported from Chinese producers, an increase of $135/mt from the last tender. If the final price comes in at that level, it will be about $185/mt below the average 2022 tender price of $635-$640/mt CFR.

Pakistan:       

Pakistan’s Fertilizer Review Committee (FRC) has warned the country could face a shortfall of urea due to reduced domestic production. The FRC estimated the supply gap at 200,000-600,000 mt through the 2023-2024 season.

The reduced urea production was attributed to domestic producers having less access to natural gas, the panel said, thus curtailing their output. Prices for farmers have already been affected by the reduced availability. Local media reported the price of a 50-kg bag of urea firming from Rs2,600 ($9) to Rs4,000 ($14).

Black Sea:     

Prilled urea in the Black Sea followed the Arab Gulf and China markets higher. Sources reported the new price level at $380-$410/mt FOB.

Several cargoes of Russian urea are being assembled for possible sale to India as part of the IPL tender, sources reported. Some tonnage from neighboring countries could also be offered. Poti, located in the far east of the Black Sea, was named the most likely port of shipment, as routes from this port avoid the war zone in the northern part of the Black Sea.

Turkey imported 2 million mt of urea in January-June, according to Trade Data Monitor,up from 1 million mt recorded in first-half 2022. Oman supplied 46% of the market with 901,000 mt, followed by Egypt with 563,000 mt and Russia with 250,000 mt.

June 2023 imports firmed 53% year-over-year, to 278,000 mt from 181,00 mt. Oman sent 172,000 mt, followed by Egypt with 84,000 mt. Second-quarter imports were 1.1 million mt, more than double the year-ago 477,000 mt.

Indonesia:     

Rumors continue to circulate that Pupuk is getting ready to hold a selling tender. Sources said the call could come as early as next week, citing a common view that the tender will be called as prices are revealed in the Indian tender on Aug. 9. Others argued that Pupuk might call the tender just before the Indian tender closes.

The argument for waiting until the IPL numbers are released suggests that Pupuk is looking to maximize prices. If the Indian tender price comes in at $410/mt CFR, as some have predicted, the price would translate to a netback of roughly $390/mt FOB Indonesia.

If the selling tender is called before the Indian tender closes, sources speculated that buyers will try to lowball the price into the $370s/mt FOB or lower. By waiting, said one trader, the producers will have the backing of the Indian business to justify a higher price.

Various estimates have been tossed about regarding how many tons might be offered in the tender. Pupuk could be looking to move as many as 300,000 mt through September and October, sources said. The production lines at Kaltim III and Kaltim V are expected to be back online and at full capacity by the end of August.

Middle East: 

Arab Gulf producers have gone quiet as they and traders work out pricing for the upcoming Indian tender. Sources said producers are hoping to not only maintain the $400/mt FOB level achieved by SABIC last week, but to move the price higher.

A lack of any deals from Egypt left the last-done price at $467/mt FOB.

China:

Expectations that a large amount of Chinese urea would be offered in the Indian tender received a shock during the week, as the Chinese government appeared to object to a sizable transfer of material from domestic warehouses to portside facilities for export, sources reported.

Approximately 200,000 mt of urea were reportedly sent to export facilities from the domestic supply pipeline. Once the move was discovered, the Chinese government decided the tonnage needed a closer look to ensure the action would not impact domestic supplies, sources said.

The government appears to be angling toward a more intensive export inspection, which could throw the material’s availability for the Indian tender into question. Sources have already reported that pricing out of China appeared to be on the rise because of the action.

So far, the public price was put at $410/mt FOB for granular urea and $400/mt FOB for prilled urea. These pricing ideas, while not yet achieved, were higher than expectations from last week. The move prompted some traders to speculate that the $400/mt FOB price could be treated as the basis for sales into India.

Ethiopia:       

Trade Data Monitor reported January-July urea imports at 398,000 mt, off from 406,000 mt received through the first seven months of 2022. Egyptian urea totaled 350,000 mt for the period, accounting for 88% of the market.

Shipments into Ethiopia are typically based on the country’s annual urea buying tender. July traditionally marks the zenith of the Ethiopian import season, with limited tonnage arriving through the rest of the year. July imports were pegged at 148,000 mt, compared with 61,000 mt received in July 2022. Egyptian urea accounted for 100,000 mt.

In the previous three years, Egypt has come to lead the Ethiopian market. In 2020, Egypt urea accounted for 52% of Ethiopia’s urea imports, while Egyptian tons made up 45% of the Ethiopian market in 2021. Egypt supplied 78% of Ethiopian imports in 2022, sending 355,000 mt.

Brazil:

Urea prices rallied $30-$40/mt, to $440-$450/mt CFR, on the expectation that the Brazil market will be in direct competition with the Indian tender for available supply. Offers subsequently moved up to $455-$460/mt CFR, but no transactions were confirmed at that level. An import price of $455-$460/mt CFR would effectively kill farm-level demand, buyers said.

With the domestic Brazil market continuing to seek direction, Rondonopolis urea prices jumped as much as $40/mt this week to $550-$595/mt FOB ex-warehouse. Given the wide price range, buyers seeking product for the corn safrinha, planted in February of next year, will likely hold out for better prices.

UAN

Commodities, Eastern Canada, Eastern Cornbelt, Geo Region, Market Watch, Northeast, Northern Plains, U.S. Gulf, UAN, Western Cornbelt

US Gulf:

NOLA UAN barge prices strengthened to $230/st ($7.19/unit) FOB for confirmed business, up from last week’s $220-$225/st ($6.88-$7.03/unit) FOB. Another round of higher inland postings on July 31 pushed NOLA offers to a high of $240/st ($7.50/unit) FOB for November-December shipment, but no business was confirmed at that level.

Eastern Cornbelt:

Another increase from CF on July 31 pushed UAN-32 terminal prices up $15-$20/st in the Eastern Cornbelt, depending on location.

New prices for November-December shipment included $275/st ($8.59/unit) FOB Cincinnati and Mount Vernon, Ind., and $280/st ($8.75/unit) FOB Peru, Ill., up from July 25 prices of $255-$260/st FOB and July 14 summer fill offers at $225-$230/st FOB.

Western Cornbelt:

UAN-32 was quoted at $265-$285/st ($8.28-$8.91/unit) FOB in the Western Cornbelt, depending on location. Postings from CF firmed again on July 31, with new levels reported at $275/st ($8.59/unit) FOB St. Louis and Port Neal, Iowa, and $285/st ($8.91/unit) FOB Muscatine, Iowa.

Reference UAN-32 pricing in the Southern Plains strengthened to $255/st ($7.97/unit) FOB Verdigris and $260/st ($8.13/unit) FOB Woodward, Okla., up $20-$25/st from the prior postings on July 25.

Northern Plains:

The latest UAN-32 offers were pegged at the $291/st ($9.09/unit) level FOB Winona, Minn., while UAN-28 pricing in the North Dakota market was reported at $320-$330/st ($11.43-$11.79/unit) DEL from Canada.

Northeast:

UAN-32 pricing dropped to $245-$265/st ($7.66-$8.28/unit) FOB Baltimore, depending on supplier. The market out of terminals in upstate New York remained at the $350/st ($10.94/unit) FOB level in early August.

The latest Baltimore prices for 28-0-0-5S and 27-0-0-3S dropped to $255/st FOB and $225/st FOB, respectively.

Eastern Canada:

UAN-28 pricing was quoted at C$442-$560/mt (C$15.79-$20.00/unit) FOB in Eastern Canada, up from C$365-$442/mt (C$13.04-$15.79/unit) FOB at last report. The latest UAN-32 price remained at the C$505/mt (C$15.78/unit) FOB level on a spot basis in Ontario.