Expanding drought conditions were a source of growing concern in the Eastern Cornbelt in mid-June. Most of Illinois is now in the moderate-to-severe drought category, according to the June 22 US Drought Monitor, with those same conditions reported across the northern half of Indiana.

Moderate drought also covered northwestern Ohio and the southern edge of the state at mid-month, with most of Michigan’s Lower Peninsula labeled as a moderate drought area as well.

The drought impact was taking a toll on crop quality at mid-month. Good or excellent ratings were assigned to just 36% of the Illinois corn crop on June 18, compared with 56% in Indiana, 61% in Ohio, and 32% in Michigan. Soybeans were also suffering, with just 23% of Michigan’s crop rated as good or excellent, compared with 33% in Illinois, 57% in Indiana, and 61% in Ohio.

Western Cornbelt:

Highs in the low-90s were common across central Iowa and Missouri at midweek, but forecasts warned of potentially severe thunderstorms by the coming weekend. Nebraska was also bracing for an active weather pattern as the week progressed, with thunderstorms, damaging winds, hail, and isolated tornadoes possible for western, central, and eastern areas of the state.

The entire Western Cornbelt was enveloped in worsening drought conditions, according to the June 22 US Drought Monitor. A broad band of extreme-to-exceptional drought covered eastern Nebraska and the western edge of Iowa, with severe-to-extreme drought blanketing most of northern Missouri.

Crop quality remained largely favorable in the region at mid-month, with good or excellent ratings assigned to 59% of the corn in Iowa and Nebraska, and 43% in Missouri. Good or excellent ratings were also assigned to 56% of Iowa’s soybeans, compared with 50% in Nebraska and 44% in Missouri, while Missouri’s cotton and rice crops were 60-65% good or excellent as of June 18.

Northern Plains:

Highs in the low-80s were common across the Dakotas during the week, with an increased chance of rain and thunderstorms by the weekend. Temperatures in the 90s were reported across southern Minnesota, but weekend rains were also in the forecast for much of the state.

Minnesota needs the moisture, as nearly all of the state is in some form of drought, ranging from abnormally dry in northern locations to pockets of severe drought in the east-central areas of the state. Eastern South Dakota was also experiencing moderate-to-extreme drought conditions as of June 22.

With corn now 91-99% emerged in the region, good or excellent ratings were assigned on June 18 to 67% of the acreage in Minnesota, 63% in North Dakota, and 48% in South Dakota. Soybean conditions were similar, with 67% of Minnesota’s crop rated as good or excellent, compared with 53% in North Dakota and 50% in South Dakota.

Minnesota led the region in small grains quality, with 58-67% of the spring wheat, barley, and oats rated as good or excellent in the state, compared with 50-56% in North Dakota and 32-40% in South Dakota.

Northeast:

The week started with cool, rainy conditions across New England, but highs in the mid-80s were expected by the end of the week. Pennsylvania, by contrast, was bracing for rain after a lengthy stretch of dry weather, with overnight lows dropping to the 50s and the possibility of coastal flooding as the week progressed.

With 83% of the crop emerged, Pennsylvania’s corn crop was rated at 38% good or excellent on June 18, with sidedress applications “going full tilt right now,” according to one contact.

“We got around two inches of rain, which was needed badly,” he added. “The rain inspired some more optimism and brought fertilizer demand back. So yes, crops are looking better than they did two weeks ago.”

Eastern Canada:

The week brought hot, humid weather to much of Eastern Canada, with Toronto temperatures reaching 26 C and humidex values hitting 31 C at midweek. Environment Canada issued a heat warning for parts of northern New Brunswick, with temperatures expected to climb to 30-32 C as the week progressed.

The hot, dry weather did little to help firefighting efforts in Quebec, where 88 active forest fires were burning early in the week. A stronger chance of rain was in the weekend forecast for much of the region, however.

Corn sidedressing was finishing up across the region in late June, sources said, along with some replanting of soybeans that suffered from dry weather earlier in the season. While some fertilizer prices were starting to reset for the summer, other suppliers were still out with spring price lists as demand starts to wind down in the region.

Transportation

June 23, 2023Illinois River, Market Watch, Mississippi RIver, Ohio River, Transportation, U.S. Gulfmickeybarb@charter.net

US Gulf:

Intermittent marine travel outages were expected between 7:00 a.m. and 7:00 p.m. daily at the BNSF railroad bridge, located at Mile 1 of the Port Allen Route, through July 6. The closures were scheduled to repeat July 17 through Aug. 14. Reverse head conditions forced Harvey Lock to shut down on June 15, closing the site until further notice. No timeline for reopening was available on June 21.

Colorado Lock work begun on Dec. 5, 2022, was slated to conclude on June 23, sources said. The project was noted running 7:00 a.m. through 7:00 p.m. daily. Delays topped out at 19 hours during the week.

Bayou Sorrel Lock guidewall repairs scheduled to start on June 26 will slow lockages daily from 7:00 a.m. to 4:00 p.m., through an estimated March 2024. Chamber repairs at Leland Bowman Lock, tentatively slated to kick off June 30, were expected to impact daytime navigation through approximately July 14.

Port Allen Lock delays were counted up at 14 hours, while Industrial Lock passages saw intermittent wait times in a wide 9-28 hour range. Sporadic Calcasieu Lock waits were noted at 4-8 hours. Boats were delayed by 5-21 hours at Brazos Lock on June 19-20.

Mississippi River:

Towing restrictions continued on the Mississippi River due to unseasonably low water levels. On the lower river, northbound tows were capped at 10-foot drafts from New Orleans to Cairo, falling from 11 feet reported one week earlier. Tows running downriver were permitted up to 11-foot drafts south of Cairo.

Southbound barge counts were reduced by 10-20% from normal levels, stretching delivery windows by an estimated 12-24 hours, while a safety advisory remained in effect at the lower river’s Miles 225-228.3 due to the Baton Rouge river gauge holding below the 16-foot mark. On the upper river, maximum drafts were reportedly cut by 5-15% for both northbound and southbound tows loading at St. Louis.

The Baton Rouge river gauge was noted at 9.22 feet and falling slowly on June 21. New Orleans was posted at 2.6 feet and holding. The Memphis gauge, shown hovering just above the (-)5.0-foot low stage on June 21 at (-)4.98 feet, was projected to fall into low stage on July 1.

Sources reported an overnight shutdown on June 19 at Mile 779 of the lower river after several vessel groundings were reported in the area. Passage was unavailable at Mile 537 on June 18-19 due to dredging. Rolling 24-hour shutdowns were expected in the area for the duration of the project.

Pipeline removal at the lower river’s Mile 9 shut the area to daytime navigation on June 20. Channel work underway since May 13 at Miles 931-933 limited southbound navigation from 7:00 a.m. to 6:00 p.m., prompting delays in a 12-18 hour range. The project was scheduled to continue through mid-July. The Corps described work as 40% completed on June 5.

Illinois River:

Low water levels on the Illinois River extended draft reductions for the full length of the river. Sources noted maximum drafts at nine feet.

Planned shutdowns at Brandon Road Lock, Dresden Island Lock, and Marseilles Lock, set to continue through Sept. 30, effectively closed the river to commercial navigation. Starved Rock Lock is scheduled to close July 11-14 for miter gate repairs, temporarily removing Ottawa from the river’s list of available ports.

Wickets at Peoria Lock and LaGrange Lock remained down for the week, forcing tows to lock through both locations.

Ohio River:

Main chamber shutdowns at John T. Meyers Lock are underway through Aug. 20 for repairs to the floating mooring system. The site’s auxiliary chamber will close between Aug. 21 and Sept. 10 for miter gate work, after which the main chamber will shut once more from Sept. 11 to Nov. 17.

The New Cumberland Lock auxiliary chamber is closed through Aug. 18, sources said. Navigation remains available through the primary chamber. The Melville Lock secondary chamber is offline for repairs until Aug. 4. Auxiliary chamber travel at Meldahl Lock is unavailable through June 30.

Tows were required to use an assist boat on southbound travel through Smithland Lock due to strong outflows. The land chamber at Smithland is scheduled to shut Sept. 22 through Oct. 21 for miter gate machinery repairs, while the river chamber will close for miter gate machinery replacement from Oct. 22 to Nov. 20.

Planned maintenance will shut the Greenup Lock main chamber July 5 through Aug. 14, forcing detours through the auxiliary chamber. Repairs at Winfield Lock, scheduled July 10 through Sept. 15, are not expected to force significant travel delays, sources said.

On the Tennessee River, Kentucky Lock delays ran up to 26 hours. Low water levels on the Monongahela River reduced maximum barge drafts by 5% until further notice, sources said.

Engro Corp. – Management Brief

June 23, 2023Management Briefsmickeybarb@charter.net

Shahzada Dawood, 48, who was among the five people killed on the Titan submersible as it descended to the Titanic wreckage on June 18, was a British Pakistani businessman and the vice chairman of Engro Corp., a business conglomerate headquartered in Karachi, Pakistan. Engro Fertilizers Ltd., one of the company’s business units, is Pakistan’s leading urea producer, with 2.19 million mt/y of urea capacity and 1.23 million mt/y of ammonia capacity in 2023.

According to the New York Times, Dawood’s work with the company focused on renewable energy and technology. He was also involved in the Engro Foundation, which supports small-scale farmers. Dawood’s 19-year-old son, Suleman Dawood, also perished on the Titan, along with British businessman Hamish Harding, diver and Titanic researcher Paul-Henri Nargeolet, and Stockton Rush, CEO of OceanGate, which owned the submersible.

YCA, Bunker Holding Partner on Marine Fuel

June 23, 2023Ammonia, Denmark, News, News Briefs, Norwaymickeybarb@charter.net

Yara Clean Ammonia (YCA) and Bunker Holding Group, a global supplier of marine fuel based in Denmark, announced on June 22 that they have signed an MOU to collaborate on accelerating the development of the market for clean ammonia as a shipping fuel.

The agreement, which connects a global supplier of clean ammonia and one of the world’s largest bunker suppliers, will cover multiple global geographies and focus on serving First Mover initiatives spanning different regions, the companies said. They also noted that the MOU contributes to several of the UN’s 2030 Sustainable Development Goals.

“We look forward to collaborating with Bunker Holding to support the acceleration of the net-zero carbon energy transition for the shipping industry with clean ammonia,” said Murali Srinivasan, YCA’s Senior Vice President Commercial. “Our global assets and logistical footprint, coupled with Bunker Holdings position as the world’s largest bunker player, will bring safety, reliability, and security of clean ammonia supply as shipping fuel and will add more resilience and robustness to developing this value chain in the future.”

“We are excited to work with Yara Clean Ammonia on developing a credible commercial offering for the supply of low- and zero-carbon ammonia to our global customer base,” said Valerie Ahrens, Senior Director, New Fuels and Carbon Markets, for Bunker Holding. “We at Bunker Holding are committed to playing a leading role in facilitating the decarbonization of the maritime sector, and as such it is vital for us to collaborate with partners who can offer the market confidence around the scale and security of supply of low-carbon fuels.”

Bunge to Purchase Viterra for $8.2 Billion

June 16, 2023Featured, News, The Netherlands, Western Cornbeltmickeybarb@charter.net

Missouri-based agribusiness Bunge Ltd. has agreed to buy Glencore PLC-backed Viterra for $8.2 billion in stock and cash, according to a June 13 statement by both companies. The combined business will create an agribusiness trading giant large enough to compete with Minneapolis-based Cargill Inc. and Chicago’s Archer-Daniels-Midland Co.

Under the terms of the agreement, which was unanimously approved by the Boards of Directors of Bunge and Viterra, Viterra shareholders would receive approximately 65.6 million shares of Bunge stock, with an aggregate value of approximately $6.2 billion, and approximately $2.0 billion in cash, representing a consideration mix of approximately 75% Bunge stock and 25% cash. As part of the transaction, Bunge will assume $9.8 billion of Viterra debt.

In addition, Bunge plans to repurchase $2.0 billion of Bunge’s stock to enhance accretion to adjusted EPS. Viterra shareholders would own 30% of the combined company on a fully diluted basis upon the close of the transaction, and approximately 33% after completion of the repurchase plan.

The companies said the combination is expected to generate approximately $250 million of annual gross pre-tax operational synergies within three years of completion. Additionally, significant incremental network synergies are expected through joint commercial opportunities, vertical integration efficiencies, and improved logistics and trading options from a larger network.

The transaction, coupled with the associated $2.0 billion share buyback, is expected to be accretive to Bunge’s Adjusted EPS in the first full year post closing and continue to improve with the realization of synergies.

“The combination of Bunge and Viterra significantly accelerates Bunge’s strategy, building on our fundamental purpose to connect farmers to consumers to deliver essential food, feed, and fuel to the world,” said Greg Heckman, Bunge’s CEO. “Our highly complementary asset footprints will create a network that connects the world’s largest production regions to areas of fastest growing consumption, enhancing the geographical balance and adaptability of our global value chains and benefitting farmers and end-customers.”

The two companies highlighted several strategic and financial benefits of the merger, including an enhanced global network to better serve farmers and customers; increased diversification across geographies, seasonal cycles, and crops to better manage risk; greater operational flexibility across oilseed and grain supply chains and processing; and greater resources and combined employee talent.

“Viterra and Bunge are two leading agriculture businesses,” said Viterra CEO David Mattiske. “In combining our highly complementary origination, processing, and distribution networks, we are better positioned to meet the increasing demand for the food, feed, and fuel products we offer. Together, we will play a leading role in the future of the agriculture industry, developing fully traceable, sustainable supply chains and moving towards carbon-neutral operations, while creating a strong growth platform for our combined business.”

Bloomberg News first reported the talks about a potential combination last month (GM May 26, p. 30). Glencore has flirted with the idea of a deal with Bunge on and off for years. In 2017, it approached Bunge about a friendly takeover, but was publicly rebuffed. Since then, Bunge has replaced its CEO and other senior executives.

The merger is expected to close in mid-2024, subject to regulatory approvals and approval by Bunge shareholders. The combined company will operate as Bunge, with operational headquarters in St. Louis, Mo., and will be led by Heckman and John Neppl, Bunge’s Chief Financial Officer. Mattiske will join the Bunge leadership as Co-CEO.

The Bunge Board of Directors is expected comprise eight Bunge nominated representatives and four representatives nominated by Viterra shareholders after the completion of the transaction. Viterra’s current headquarters in Rotterdam will remain as an important commercial location for the company.

The deal has the support of two of Canada’s biggest pension funds (GM June 2, p. 1), which have a combined stake of 49.98% stake in Viterra, Bloomberg reported. The Canada Pension Plan Investment Board will receive an equity stake of about 12% in the combined company and about $800 million in cash, it said in a statement.

The transaction is fully funded with a financing commitment of $7 billion provided by Sumitomo Mitsui Banking Corp.

“We have great respect for the team at Viterra, which shares our commitment to excellence, and believe this combination will offer great opportunities for employees of both companies,” Heckman added. “Together, we will be positioned to increase our operational efficiency while innovating to address the pressing needs of food security, efficiency for end-customers, market access for farmers, and sustainable food, feed, and renewable fuel production.”

CVR Energy to Keep Fertilizer Business

June 16, 2023Featured, News, Nitrogen, Texasmickeybarb@charter.net

CVR Energy Inc. announced on June 13 that its board of directors has decided to retain its interest in the company’s nitrogen fertilizer business, which is indirectly owned by CVR Energy through the general and limited partner interests it holds in CVR Partners LP, a publicly traded limited partnership.

CVR in November (GM Nov. 22, 2022) said it was exploring a potential spin-off of the nitrogen fertilizer business to create a new public company that was separate from CVR’s refining and renewables businesses. The fertilizer facilities owned and operated by CVR Partners are located at Coffeyville, Kan., and East Dubuque, Ill., and produce ammonia, urea, and UAN.

CVR said the decision to keep the fertilizer business was made following a thorough review by the board of the potential transaction and current market conditions, and in consideration of the best interests of CVR Energy and its stockholders.

“Included within our exploration of a potential spin-off was how to create pure-play refining and fertilizer entities while still retaining the operational efficiencies both CVR Energy and CVR Partners enjoy from our current model,” said Dave Lamp, President and CEO of CVR Energy. “Following thoughtful and careful analysis, the board concluded that the complexity of a transaction that could accomplish both goals may not deliver the appropriate value under current conditions.”

CVR Partners reported first-quarter net income of $101.9 million on net sales of $226.3 million, up from the year-ago $93.7 million and $222.9 million, respectively (GM May 5, p. 26). CVR noted record production and improved reliability at both fertilizer facilities, with the combined ammonia utilization rate climbing to 105% from last year’s 88%.

“We will continue to explore ways to capitalize on the unique assets of each of CVR Energy and CVR Partners, particularly within the Coffeyville complex, including their proximity to the farm belt, excess hydrogen capacity, and existing CO2 sequestration capabilities,” Lamp said on June 13.

He noted as well that the new feed pre-treatment unit at CVR Energy’s Wynnewood, Okla., refinery remains on track for mechanical completion in late third quarter 2023, which the company expects “to enhance the renewables capture rate and profitability.” The unit is expected to be capable of producing 7,500 barrels/day of treated feedstock for the refinery’s Renewable Diesel Unit from vegetable oils and other renewable feeds.