All posts by mickeybarb@charter.net

Wilbur-Ellis Acquires Emmert, Partners with Guardian

California, Eastern Cornbelt, News, News Briefs

Wilbur-Ellis, San Francisco, Calif., announced that its Nutrition business has entered into a definitive agreement to acquire F.L. Emmert, a manufacturer and marketer of advanced nutritional solutions for the pet and livestock industries. In addition, Wilbur-Ellis has formed a partnership with Guardian Agriculture, developer of the first fully autonomous crop protection aircraft system.

Emmert is a 140-year-old, family-owned company with manufacturing operations in Cincinnati, Ohio, and more than 35 employees. Wilbur-Ellis said the company has a proven track record in animal nutrition, and described it as an innovator with strong research and development capabilities in expanding U.S. and global markets.

“We look forward to welcoming the Emmert team and we’re excited about the capabilities this acquisition provides,” said Matt Fanta, President of Wilbur-Ellis Nutrition. “Emmert supports Nutrition’s strategic priorities and complements our three core businesses – pet, livestock, and aquaculture. The acquisition will expand our product and customer base in pet food with value-added products.”

Wilbur-Ellis said consummation of the acquisition remains subject to the satisfaction of customary closing conditions. “Wilbur-Ellis has a long history of growth through acquisition,” Fanta said. “And in every case, having similar values has been an important consideration. With that in mind, we look forward to having such a strong, value-based organization like Emmert become part of the Wilbur-Ellis Nutrition business.”

The multi-million dollar partnership with Guardian, announced in late June, will give Wilbur-Ellis customers first access to Guardian’s fully electric vertical take-off and landing (eVTOL) aircraft system for precision application of crop protection products. Wilbur-Ellis said the autonomous aircraft has four six-foot propellers and an overall width of 15 feet, allowing it to carry a multi-hundred pound payload and cover 40 acres per hour.

“This is the first new aerial technology to make a material impact on American farms,” said Mike Wilbur, CEO of Cavallo Ventures at Wilbur-Ellis. “We believe it can be profitably and rapidly deployed and are looking forward to working with Guardian Ag to roll out their technology to our customers and partners.”

The eVTOL system includes a ground station supercharger and software generating domestically stored data with in-flight monitoring, measurement, and data collection capabilities. Application variables are collected in real-time, including wind speed, temperature, and obstructions, utilizing pre-planned flight plans, designated spray boundaries, and spray rates.

“Guardian’s technology delivers tremendous benefits to both growers and the environment” said Adam Bercu, CEO and Co-founder of Guardian Ag. “Growers can expect a cost-effective application that will solve critical problems with coverage quality, sustainability, repeatability, and eliminate off-target spray and overspray.”

Wilbur-Ellis said Guardian’s regulatory approval process is well under way, with commercialization and availability to growers occurring in 2023. Wilbur-Ellis’ application business currently covers approximately five million acres annually.

“We are excited to make an early investment in this technology, which is the only unmanned aerial application system available today, and we’re even more excited to partner with Guardian to commercialize it and bring it to our customers,” said John Kuhn, Director of Business Development at Wilbur-Ellis.

Nutrien Beats Analysts on Earnings, Adjusted EBITDA; Reverses Impairment, Revises Guidance Downward

Earnings, Featured, News, Nitrogen, Phosphate, Potash, Saskatchewan

Nutrien Ltd., Saskatoon, reported second-quarter net earnings of $3.6 billion ($6.51 per diluted share) and adjusted EBITDA of $4.99 billion, besting the Bloomberg Consensus, the average estimates of major analysts, which were $3.16 billion and $4.9 billion, respectively. Nutrien sales were $14.5 billion, just shy of analyst projections of $14.6 billion. By comparison, year-ago net earnings were $1.11 billion ($1.94 per share) on sales of $9.76 billion, with adjusted EBITDA of $2.22 billion.

“Nutrien delivered record earnings in the first half of 2022 due to the strength of market fundamentals, strong operating performance, the advantaged position of our global production assets, and the excellent results of Retail,” said Ken Seitz, Nutrien’s Interim President and CEO. “We generated strong results across our integrated business and demonstrated our unmatched capability to efficiently supply our customers with the products they need to help sustainably feed a growing world.

“We expect supply challenges across global energy, agriculture, and fertilizer markets to persist well beyond 2022,” he added. “The strength of our projected cash flow provides an opportunity to accelerate high-return strategic growth initiatives and return significant capital to shareholders. We intend on completing our 10% share repurchase program in 2022, increasing the total amount of capital returned to shareholders to approximately $6 billion during the year.

“We expect nitrogen prices to strengthen in the second half, supported by high European gas prices as well as restricted Chinese urea and Russian ammonia exports,” Seitz told analysts. The company also said that it has been exporting more UAN from the U.S. than it has previously and it is looking at opportunities to export more ammonia.

Nutrien reversed a non-cash impairment of $450 million related to its Phosphate operations, which impacted net earnings. In 2020, Nutrien recorded an impairment of Aurora phosphate assets totaling $545 million as a result of lower long-term forecasted global phosphate prices.

In 2017 and 2020, the company recorded an impairment totaling $465 million on its White Springs assets, and the company now said that could also see an impairment reversal, with the maximum being $340 million.

Despite the uptick in earnings, Nutrien revised downward full-year 2022 adjusted EBITDA guidance to $14-$15.5 billion from the $14.5-$16.5 billion given in May. The company said the revision was primarily due to lower expected Nitrogen earnings as a result of lower nitrogen benchmark pricing and higher natural gas costs. Full-year adjusted net earnings per share guidance was dropped to $15.80-$17.80 from $16.20-$18.70, with this guidance including plans to allocate approximately $5 billion to share repurchases in 2022.

Nutrien also lowered potash and nitrogen sales volume guidance to reflect the impact of lower application in North America this spring. Potash sales volumes went to 14.3-14.9 million mt from 14.5-15.1 million mt, while adjusted EBITDA was narrowed to $7.6-$8.2 billion from $7.5-$8.3 billion. The company has also tightened its forecast for global potash shipments to 61-64 million mt from 60-65 million mt.

Nitrogen sales volumes went to 10.6-11.0 million mt from 10.7-11.1 million mt and adjusted EBITDA to $4.0-$4.7 billion from $5.0-$5.8 billion. Phosphate adjusted EBITDA guidance went to $750-$850 million from $800-$900 million.

Nutrien revised Retail adjusted EBITDA guidance upward $2.1-$2.2 billion from $1.8-$1.9 billion.

Six-month net earnings were $4.99 billion ($8.99 per share) on sales of $22.16 billion, up from the year-ago $1.25 billion ($2.16 per share) and $14.42 billion. Adjusted EBITDA was $7.61 billion, up from $3.02 billion.

Retail (millions) 2Q-22 2Q-21 YTD-22 YTD-21
Adjusted EBITDA 1,427 1,097 1,667 1,206
Gross Margin 2,340 1,858 3,185 2,510
Total Sales 9,422 7,537 13,283 10,509
CN Sales 4,548 3,045 6,135 4,061
CN Margins 911 703 1,203 923
CN Volume (000 mt) 4,995 6,152 7,170 8,552
Avg ($/mt) 911 495 856 475
CN gross margin per mt 182 114 168 108
Potash (millions) 2Q-22 2Q-21 YTD-22 YTD-21
Adjusted EBITDA 2,027 495 3,433 875
Gross Margin 2,269 500 3,814 820
Total Sales 2,668 817 4,518 1,428
Sales Volume (000 mt) 3,709 3,621 6,752 6,778
Avg ($/mt) 719 226 669 211
Nitrogen (millions) 2Q-22 2Q-21 YTD-22 YTD-21
Adjusted EBITDA 1,240 555 2,235 855
Gross Margin 1,058 416 1,918 566
Total Sales 1,880 982 3,342 1,555
Sales Volume (000 mt) 2,595 2,966 4,860 5,369
Avg ($/mt) 724 331 688 290
Gas Costs ($/mmBtu) 8.48 3.89 7.68 3.54
Phosphate (millions) 2Q-22 2Q-21 YTD-22 YTD-21
Adjusted EBITDA 184 112 423 209
Gross Margin 156 84 363 150
Total Sales 514 351 1,077 695
Sales Volume (000 mt) 556 586 1,207 1,288
Avg ($/mt) 925 598 892 539

Mosaic Misses Analyst Estimates; Details Tight Phosphate, Potash Supplies

Brazil, Earnings, Featured, News, Phosphate, Potash, Tampa

The Mosaic Co.’s second-quarter results missed analyst estimates, with the company posting net earnings of $1.04 billion ($2.85 per diluted share) on revenues of $5.37 billion and adjusted EBITDA of $2.03 billion. Analyst estimates were $1.4 billion, $5.67 billion, and $2.18 billion, respectively. However, the company easily surpassed the year-ago figures of $437.2 million ($1.14 per diluted share) on net sales of $2.8 billion and adjusted EBITDA of $829 million. Gross margin was $1.85 billion, up from $752.3 million.

“Mosaic’s second-quarter results demonstrate the strength of the business,” said Joc O’Rourke, Mosaic President and CEO. “We are expanding production to help meet global demand and returning significant capital to shareholders. We expect strong fundamentals will continue for the rest of the year and into 2023.

“In potash, we continue to expect Belarusian exports to be down 8 million mt this year,” O’Rourke told analysts. “Some of that will be mitigated by incremental supply from producers like Mosaic over the next 18 months. But that will not be enough to erase the deficit that we see lasting well into 2023 at least.”

O’Rourke said Mosaic expects that Belarusian and Russian exports combined will be down some 12 million mt of potash this year due to sanctions. He said Belarus is probably moving 100,000 mt a month to China by rail, but other than that Mosaic is seeing very little Belarus material in the market.

“In phosphates, China has continued to restrict exports as it prioritizes domestic and industrial demand,” added O’Rourke. “We now believe full-year phosphate exports from China could be down as much as 5 million mt from the prior year total of 11.5 million mt.”

“Shifting focus, we believe global fertilizer demand in the first half of 2022 was down about 10% from the same period last year, which aligns with the shortfall we’ve seen in supply,” he continued. “Grower sentiment has grown more cautious, but supply constraints are supporting global prices and margins well above historical levels, a situation we believe will continue at least through the rest of the year.”

O’Rourke said North America and Brazil have been well-supplied thus far in 2022, but much of the rest of the world is continuing to see unfilled demand of both phosphates and potash as a result of limited supply.

He said that in North America, a compressed season due to weather, as well as higher prices, led farmers to mine their soil. However, he said any of this curtailed application must be made up in the next couple of seasons. He said in both North America and Brazil, Mosaic expects normal application in the second-half 2022. “But as always, with higher prices, people are deferring the purchase as late as they can. However, good economics will mean that in both cases, we believe normal application will occur,” he said.

O’Rourke also gave an update of Mosaic’s potash initiatives, saying the Esterhazy K3 has reached the initial operating run rate target of 5.5 million mt/y at the end of the first quarter, with plans to continue the optimization of the complex with the addition of three new underground miners over the next year, resulting in an incremental 1 million mt/y of production capacity. “At Colonsay, we’ve begun the process of restarting the second mill, which should expand output to 2 million mt/y by the second half of 2023.

“We remain open to modest, high return projects and small bolt on acquisitions, especially in Brazil, but we are not interested in large-scale greenfield projects,” said O’Rourke.

Six-month net earnings were $2.22 billion ($6.05 per share) on net sales of $9.3 billion, up from the year-ago $593.9 million ($1.55 per share) and $5.1 billion, respectively. Gross margin was $3.29 billion, up from $1.19 billion.

Potash (millions) 2Q-22 2Q-21
Sales Volume (000 mt) 2.3 2.3
Production Volume (000 mt) 2.4 2.1
Gross Margin (million $) 928 217
Operating Earnings (million $) 915 49
Adjusted EBITDA 998 285
Sales (million $) 1,600 663
MOP Selling Price $/mt 678 243
Phosphates (millions) 2Q-22 2Q-21
Sales Volume (000 mt) 1.7 2.0
Production (Finished) Volume (000 mt) 1.6 1.7
Gross Margin (million $) 642 309
Operating Earnings (million $) 578 283
Adjusted EBITDA 758 408
Sales (million $) 1,800 1,200
DAP Selling Price $/mt 920 544
Mosaic Fertilizantes (millions) 2Q-22 2Q-21
Sales Volume (000 mt) 2.3 2.3
Gross Margin (million $) 450 185
Operating Earnings (million $) 420 170
Adjusted EBITDA 444 203
Sales (million $) 2,300 1,000
Avg Finished Price (Dest.) 974 442

Meristem Crop Performance – Management Brief

Eastern Cornbelt, Management Briefs

Direct-to-farm crop inputs provider Meristem Crop Performance, Columbus, Ohio, announced that John Gertz has joined the company’s senior management team as Chief Operating Officer (COO). Meristem said Gertz will help boost the company’s efforts to build the most efficient platform for driving farm business success and accelerating innovation.

“We’ve put together a team of passionate and proven agribusiness leaders to build a scalable platform to help our farm business partners deliver improved ROI for the growers they serve,” said Mitch Eviston, Meristem Founder and CEO. “We are quickly expanding our platform through dozens of dealers and partners with exposure on millions of acres, and John’s input and skill set will help us go further faster.”

Gertz comes to Meristem from Sipcam Agro USA, where he served as CEO. Before that he was with SiteOne Landscape Supply LLC, the largest distributor in the specialty turf and ornamental industry. His work in the industry began in 1995, starting in sales and marketing roles with basic discovery, post-patent products, and crop nutritionals. He holds B.S. and M.S. degrees in agronomy and crop sciences from the University of Georgia.

The Andersons Reports All-Time Record Quarterly Results

Earnings, Eastern Cornbelt, News, Specialty

The Andersons Inc. reported all-time record quarterly results for the second quarter, with net income attributable to the company of $80.5 million ($2.34 per diluted share) on revenues of $4.45 billion, up from the year-ago $41.4 million ($1.23 per share) and $3.24 billion, respectively. Adjusted EBITDA was $169.3 million, up from $103 million.

“I’m thrilled with the outstanding performance in this second quarter,” said Pat Bowe, President and CEO. “The Renewables team nearly doubled last year’s already strong performance, showing good yields and higher crush margins in our ethanol plants. Within Plant Nutrient, good inventory position management and high fertilizer prices led to higher margins and strong profitability.

“In Trade, we entered the quarter with good basis ownership positions and as expected, we benefited from basis improvement during the quarter,” he continued. “In addition, we had very strong feed ingredients merchandising results in several of our locations. Global ag markets remain volatile, creating opportunities; our teams continue to execute well and remain focused on customer needs and operational excellence.”

The Plant Nutrient Group had second-quarter pretax income of $38.3 million on revenues of $470.3 million, up from $24 million and $321.4 million, respectively. Adjusted EBITDA was $46.8 million, up from $31.6 million. The company said it expected well-positioned inventory and an overall favorable spring planting season led to strong margins that more than offset a volume decrease for agricultural fertilizers, particularly with wholesale nutrients, farm centers, and specialty liquids low-salt starters.

Six-month group income was $49.1 million on revenues of $680.3 million, up from the year-ago $32.5 million and $490.7 million, respectively. Adjusted EBITDA was $65.6 million, up from $47.6 million.

Company-wide, six-month net income was $86.6 million ($2.52 per share) on revenues of $8.43 billion, compared to the year-ago $53 million ($1.58 per share) and $5.83 billion, respectively. Adjusted EBITDA was $225.2 million, up from $166.2 million.

Intrepid 2Q Income Up on Higher Prices, Lower Volumes; New Sand Project Announced

Earnings, News, Potash, Southern Plains, Specialty

Intrepid Potash Inc., Denver, reported second-quarter net income of $23.7 million ($1.74 per diluted share) on sales of $91.7 million, up from the year-ago $19.5 million ($1.46 per share) and $67.9 million, respectively. Adjusted EBITDA was $41.5 million, up from $16.9 million.

“Intrepid’s financial performance in the second quarter and first half of 2022 has ranked among the best in nearly ten years,” said Bob Jornayvaz, Intrepid Executive Chairman and CEO. “In the first half of the year, Intrepid generated adjusted EBITDA of $91.6 million on total sales of $196.1 million, for adjusted EBITDA margins of 47%. First-half 2022 cash flow from operations totaled $83.2 million, and we ended July with $85 million of cash and cash equivalents for total liquidity of $159 million.

“Underpinned by strong cash flow generation, for 2022 we have budgeted for approximately $65 million to $75 million of capital spending, with a roughly 50-50 split between maintenance and growth,” he added. “In terms of growth projects, over the past couple quarters, we’ve highlighted several initiatives at our Utah and New Mexico facilities to help increase production and improve unit economics, and today we’re excited to announce a new sand project at our South Ranch. We’ve already made progress on permitting and leasing, and are beginning equipment purchases. This project is still in its early phases but we estimate the sand resource has over ten years of potential, and is also strategically located in the heart of oil and gas activity in the Permian basin.

“Looking ahead, the outlook for both the industry and Intrepid remains strong,” he continued. “The global fertilizer supply challenges – particularly for potash – remain unabated. Even with the announced potash supply additions, we believe the lack of supply versus historical levels of demand will result in potash prices remaining elevated. Moreover, despite recent pullback from multi-year highs, forward crop prices still point to historically strong U.S. farmer economics.

“After nearly 18 months of strong demand in the potash market, we expect buyers will approach the second-half with significantly more restraint given inventory carryover following a compressed spring and heightened concerns over the increased credit and inventory exposure they face at current price levels,” Jornayvaz said. “Despite the minor headwinds and a slower start to the third quarter than prior years, we expect agricultural demand will pick up as harvest progresses, and we are ready to meet our customer’s needs in today’s dynamic market.”

As for the Potash segment, Intrepid said that below average evaporation rates across its facilities in 2021 led to decreased potash production during second-half 2021 and first-half 2022. In addition, it said customers were reluctant to replenish potash inventories toward the back half of the second quarter, preferring to wait for summer fill programs in the third quarter.

Six-month net income was $55.1 million ($4.03 per share) on sales of $196.1 million, up from the year-ago $22 million ($1.65 per share) and $139.4 million, respectively. Adjusted EBITDA was $91.6 million, up from $29.7 million.

Potash 2Q-22 2Q-21 YTD-22 YTD-21
Sales (000 st) 48,827 37,693 105,269 81,270
Gross Margin ($000) 24,925 10,131 53,990 18,803
Sales Volume (000 st) 56 92 126 208
Production Vol. 000 st) 25 51 128 164
Avg Realized Price ($/st) 738 319 713 300
Trio 2Q-22 2Q-21 YTD-22 YTD-21
Sales (000 st) 35,467 26,924 76,519 50,619
Gross Margin ($000) 13,052 3,162 29,191 3,093
Sales Volume (000 st) 59 75 131 145
Production Vol. 000 st) 58 63 123 119
Avg Realized Price ($/st) 493 271 476 251
Oilfield Solutions 2Q-22 2Q-21 YTD-22 YTD-21
Sales (000 st) 7,512 3,331 14,512 7,584
Gross Margin ($000) 3,834 906 5,806 1,411

AdvanSix 2Q Income Up 48%; Ammonium Sulfate Takes Larger Share of Company Sales

Ammonium Sulfate, Earnings, News, Northeast

AdvanSix, Parsippany, N.J., reported second-quarter net income of $65.2 million ($2.23 per diluted share) on sales of $583.7 million, up from the year-ago $44.1 million ($1.53 per share) and $437.7 million, respectively. Adjusted EBITDA was $105.4 million, up from $79.7 million.

“Our robust second-quarter results, featuring top and bottom line growth sequentially and year-over-year, reflect the continued strength and advantage of our business model and diverse product portfolio,” said Erin Kane, AdvanSix President and CEO. “In the quarter, strong commercial performance to meet customer demand more than offset higher inflation, as well as lower sales volume primarily due to unfavorable weather conditions driving a reduction of in-season fertilizer demand.

“Our healthy cash flow performance reflects the quality of our earnings while supporting continued reinvestment in the business and return of cash to shareholders, including opportunistic share repurchases and a 16% increase in our quarterly cash dividend. Our integration of U.S. Amines is progressing very well as expected, adding additional value to our portfolio,” he added.

Second-quarter ammonium sulfate sales of $205.9 million represented 35% of the company’s total sales of $583.7 million, up from the year-ago $100 million, or 23% of $437.7 million.

AdvanSix said higher pricing across ammonium sulfate and nylon product lines was partially offset by lower prices in chemical intermediates, particularly acetone. Sales volumes decreased 4%, driven primarily by unfavorable weather conditions, resulting in a reduction of in-season fertilizer demand and lower production output compared to the prior year.

“Looking forward, we expect continued healthy North America demand for nylon and chemical intermediates, as well as favorable agriculture, nitrogen and sulfur fertilizer industry fundamentals particularly into next year’s planting season,” said Kane. “While the macro environment continues to be dynamic, we have substantially increased the earnings power of this business.

“We are well-positioned to fuel future earnings and cash flow performance with continued contributions from high-return growth and cost savings projects, an improved portfolio mix with over $200 million in sales from differentiated products, and strong and disciplined capital deployment,” he added. “Our core strategies continue to support expectations for AdvanSix’s long-term, sustainable performance.”

Six-month net income was $128.2 million ($4.37 per share) on sales of $1.06 billion, up from the year-ago $72.3 million ($2.51 per share) and $814.1 million, respectively. Adjusted EBITDA was $208.6 million, up from $137.3 million.

ARA Hails Senate Vote to Reverse NEPA Rulemaking

News, News Briefs, U.S.

The U.S. Senate on Aug. 4 voted to reverse the Council on Environmental Quality (CEQ) rulemaking related to the National Environmental Policy Act (NEPA) Implementing Regulations Revisions. The vote was praised by the Agricultural Retailers Association (ARA).

“ARA applauds the Senate for adopting this important Congressional Review Act (CRA) proposal sponsored by Senator Dan Sullivan because it is critical for the administration to reinstitute these necessary NEPA reforms to speed up the approval process for much-needed infrastructure projects,” said Richard Gupton, ARA’s Senior Vice President of Public Policy & Counsel.

“These reforms will create economic development, jobs and address supply chain disruptions, which will especially benefit the rural communities where agricultural retailers and their farmer customers live and work,” Gupton added. “We urge the U.S. House of Representatives to pass this important resolution as soon as possible.”

CEQ in July 2020 made wholesale revisions to the NEPA regulations for the first time in more than 40 years. In response to President Joe Biden’s Executive Order 13990 on Jan. 20, 2021, however, CEQ said it would engage in a “comprehensive review” of the 2020 rule and launch a phased approach to amending the NEPA regulations.

CEQ issued an Interim Final Rule on June 29, 2021, which gave federal agencies a deadline of Sept. 14, 2023, to develop or update their NEPA implementing procedures to conform to the CEQ regulations.

CEQ then issued the Phase 1 Final Rule on April 20, 2022, which the agency said finalizes a “narrow set of changes” to restore regulatory provisions that were in effect for decades before the 2020 rule and “better align the NEPA regulations with CEQ and agency expertise, as well as NEPA’s statutory goals and purpose of promoting sound decisions informed by science.”

The updated rulemaking was criticized by The Fertilizer Institute (TFI), which described it as “more red tape, duplicative regulations, and delays that will cost consumers in the end.” TFI said a more efficient permitting process is needed to ensure that critical mining projects in the U.S. have a clear path to compliance and approval (GM April 29, p. 30).

Ammonia

Ammonia, Brazil, Eastern Cornbelt, India, Market Watch, Middle East, Northern Plains, Northwestern Europe, Southeast Asia, Southern Plains, Tampa, Thailand, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa:

Continued reports of idled European ammonia capacity add to the pressure for another price increase for Tampa ammonia in September. Tampa ammonia prices were $1,100/mt CFR in August, up from July’s $960/mt CFR.

Eastern Cornbelt:

A new round of fall prepay offers for ammonia was reported at $1,025-$1,035/st FOB in Illinois and Indiana, up from the prior week’s $985/st FOB prepay level. Earlier prompt pricing at the $950/st FOB mark in the Eastern Cornbelt is reportedly no longer being offered.

Ammonia pricing FOB Lima, Ohio, was pegged at $1,000/st for prompt and $1,050/st for prepay, up from $985/st FOB for both in the previous week.

Western Cornbelt:

Prompt and prepay ammonia offers were reported at $900-$950/st FOB in the Western Cornbelt, depending on location, with the low reported in Iowa and Nebraska and the high at Palmyra, Mo. Sources also confirmed delivered ammonia prepay pricing in the $925-$980/st range in the region during the week.

Southern Plains

In the Southern Plains, ammonia pricing was reported at $850/st FOB Woodward, Okla., for prompt tons and $900/st FOB Verdigris, Okla., for prompt or prepay, up from the prior week’s $875/st FOB level at Verdigris. New truck pricing FOB Gulf Coast terminals had reportedly firmed to $1,050/st FOB following the increase in Tampa pricing for August.

Northern Plains:

Ammonia prices were up slightly in the Northern Plains in the wake of recent fall prepay offers. Prepay programs were confirmed at $920-$940/st FOB, depending on location, and $940-$950/st DEL in North Dakota and Minnesota. Fill tons were still reportedly on the table at $910/st FOB Velva, N.D., and $850/st DEL in North Dakota.

Southeast Asia:

Sources reported the Southeast Asia market is softening along with the global economy. Reportedly, buyers are taking only what is required under their contracts and are even asking suppliers to delay – if possible – some cargoes.

In addition to major buyers in South Korea and Taiwan pulling back on their demand, sources said small lots of Chinese ammonia are being offered into the market. Sources said the slowdown in the Chinese economy and industrial output is making the ammonia available. The Chinese material is said to be offered at a discount to move it more quickly.

In Indonesia, the Kaltim V facility is expected to remain down for the rest of the year. Sources said the explosion that took place in late July damaged the ability to produce ammonia and urea. Sources said the delay may extend into the next year, depending on availability of material necessary for the repairs.

Sources reported the market in Southeast Asia is so weak that even with the loss of Kaltim V, the company has some spot cargoes available for sale.

India:

Sources reported some small spot deals by CIL and IFFCO at $825-$850/mt CFR. The drop in the landed spot price is a result of a softer Southeast Asia market, some cheap Chinese ammonia entering the market, and a plentiful supply from the Arab Gulf.

India imported 832,000 mt of ammonia in the first five months of this year, according to Trade Data Monitor, down 10% from the 922,000 mt imported during the same period in 2021.

May imports were reported at 182,000 mt, up slightly from the May 2021 imports of 172,000 mt. The main supplier in May 2022 was Saudi Arabia with 63,000 mt, accounting for one-third of ammonia imports that month.

Thailand:

Ammonia imports in Thailand for the first half of the year were reported at 160,000 mt by Trade Data Monitor, down 23% from the 210,000 mt imported during the same period in 2021. Second-quarter 2022 imports were reported at 117,000 mt, up slightly from the 115,000 mt imported during April-June 2021.

June 2022 imports were down marginally, at 31,000 mt from the 32,000 mt imported during June 2021. Malaysia sent 17,000 mt for 54% of the June import market. The remaining 14,000 mt was purchased from Indonesia.

Brazil:

Ammonia imports in Brazil for January-July 2022 were reported at 271,000 mt by Trade Data Monitor, down about 30% from the 385,000 mt imported during the first seven months of 2021. The main supplier was Trinidad with 234,000 mt. Qatar and Argentina each sent 15,000 mt.

An additional 6,000 mt came from the U.S. This shipment was the first batch of ammonia sent to Brazil from the U.S. this year. During the whole of 2019 and 2020, the U.S. sent only 1 mt for each year. In all of 2018, Brazil received 13,000 mt from the U.S.

July 2022 imports were reported at 32,000 mt, down about half from the 63,000 mt received during July 2021. Trinidad supplied 25,000 mt, with 6,000 mt from the U.S. making up most of the balance.

Northwest Europe:

Imports of ammonia are holding down the price despite higher production costs in Europe. While larger buyers are looking at prices of $1,200-$1,250/mt C&F, some smaller lots have reportedly been sold at $1,300/mt C&F. Prices for September are expected to pick up, but will still be lower than if they were based on the European production cost.

Imports from Trinidad and the Arab Gulf have been holding down the Antwerp price, even as natural gas prices in Europe rise.

More Arab Gulf material is said to being offered into Europe because of declining demand in Southeast Asia. Reduced sales into Asia have made it easier for European buyers to negotiate deals for product that do not push up the price into Europe.

Middle East:

Sales of spot material at $900-$925/mt FOB are reported. Reportedly, the Saudis sold to Northwest Europe and Qatar to Bulgaria and Turkey at these levels.

Sources said producers are anxious to sell because their usual market in Southeast Asia is soft. Reportedly, buyers in Asia are asking for only the bare minimum required under their contracts. This leaves a lot of extra tons available for anxious European buyers looking to counter their own high production costs, and for OCP looking to substitute material for the loss of Black Sea material due to the war in Ukraine.

Reports of the extra tonnage available come as Ma’aden formally announced its #3 ammonia plant is entering its commercial production phase. The plant has been producing ammonia in fits and starts for a few months. The plant output is rated at 1.1 million mt/y.

Urea

Black Sea, Brazil, China, Eastern Canada, Eastern Cornbelt, India, Indonesia, Market Watch, Middle East, Northeast, Northern Plains, Thailand, Turkey, U.S. Gulf, Urea, Western Cornbelt

U.S. Gulf:

New NOLA urea trades were reported in the $580-$620/st FOB range, up from the week-ago $465-$580/st FOB.

Eastern Cornbelt:

Fueled by firming NOLA barge values, urea prices strengthened to $609-$640/st FOB in the Eastern Cornbelt, up from the previous week’s $560-$610/st FOB range, with the low confirmed early in the week at Ottawa, Ill. The Cincinnati, Ohio, market was pegged at $620-$630/st FOB during the week.

Great Lakes sources pegged the Toledo, Ohio, urea market firmly at the $650/st FOB level for August-September tons. In the South Central region, new offers firmed to $640-$650/st FOB Memphis, Tenn.

Western Cornbelt:

A firming NOLA barge market pushed urea prices up to $610-$640/st FOB in the Western Cornbelt, depending on location, with the low confirmed at St. Louis. Pricing was also up at Catoosa/Inola, Okla., where sources quoted new offers at $620-$640/st FOB during the week.

Northern Plains:

Urea prices firmed to $630-$655/st FOB in the Northern Plains, with the low confirmed at St. Paul, Minn., and the high at Carrington, N.D. Lower prices were reported for delivered urea offers, however. Delivered urea pricing in North Dakota was quoted at $570-$595/st at midweek, down from the previous $610-$680/st DEL range.

In the Pacific Northwest, urea prices firmed another $30/st during the week, moving to $655/st FOB Rivergate, Ore.

Northeast:

Urea pricing was pegged at $615-$620/st FOB in the Northeast, with the high confirmed for August tons FOB Fairless Hills, Pa. Delivered urea was also quoted at the $620/st level in southern Pennsylvania in early August.

In the South, new pricing FOB Convent, La., was confirmed at the $600/st FOB level.

Eastern Canada:

The urea market in Eastern Canada was reported in a broad range at C$1,070-$1,250/mt FOB during the week, depending on location and supplier, down from the last C$1,180-$1,300/mt FOB range confirmed in mid-July.

India:

Sources said the urea market has gone quiet as IPL processes the paperwork necessary to handle the importation of 593,000 mt awarded in its recent tender

Sources said the country still needs 1-1.5 million mt of urea to finish off the current season properly. A new tender is expected soon after vessels are nominated to handle the tonnage awarded in the IPL tender.

Urea production in India will take a hit on news that the national natural gas distributor, GAIL, will be initiating rationing that will include urea plants. GAIL said its imports of natural gas have dropped because deliveries from Gazprom Marketing failed to appear. The cutbacks could make the need for a tender to import urea even more dire.

The Indian government recently released the January-May urea import numbers. Trade Data Monitor reported that India bought 3.9 million mt during the period, up from 2 million mt last year. Arab Gulf sources were responsible for sending 1.9 million mt this year, with another 978,000 mt coming from Russia and former Soviet states.

May 2022 imports were reported at 278,000 mt, down almost 60% from the 674,000 mt received by Indian buyers in May 2021.

Black Sea:

The estimated price out of the Black Sea has risen as talk continues of a stronger global urea market and as reports are that Russian material will soon be allowed to be shipped under a deal worked out by Turkey with Russia and Ukraine. Sources peg the price at $555-$630/mt FOB for product out of Black Sea ports.

Sources said while fertilizers have never been on any sanction list, banks and insurance companies remain nervous about covering any Russian product in case the sanction rules change and leave them stuck with costs that cannot be recovered.

Indonesia:

Sources said the availability of spare parts will determine how fast Kaltim V can come back online. The earliest the plant will be back up and running, said one trader, is the end of the year. Other sources said the opening could be pushed back as far as February 2023.

An explosion in late July shut down ammonia and urea operations at the plant. The closure withdraws about 100,000 mt/m of urea from the market. Sources said there is enough granular urea available for export to cover existing commitments to international traders. Once the reserves are gone, sources said the remaining production facilities will focus on the domestic market.

The lack of any new spot deals, and the likely absence of export tenders for the rest of the year, leaves export pricing up in the air. For now, sources said people are looking at the material being shipped and its price of $547/mt FOB as the basic price. Reportedly, some traders are circulating offers at $600/mt FOB for late-August and September shipment. Potential buyers are said to be hesitant because of a lack of confidence that the product will be available.

China:

Media in China reported that the urea inventory at Chinese ports is now 128,000 mt. This is above the July average of 108,000 mt, but well below a four-year average. International traders added that it is unclear how many of those tons are available for export.

Sources noted that some Chinese traders have moved tonnage to the ports in the hope of getting customs clearance for export. If the permission is denied, the tonnage moves back into the domestic market reserve-building program in China.

The actions by the traders were expected, said one international trader. While the domestic price remains around $375/mt FOB ex-factory, international offers are now touching on $500/mt FOB for prills. Sources said no new deals have been confirmed, leaving the posted price in the $470s/mt FOB. However, the discussions for any new deals are all past that level. Expectations for prices in the $490s/mt FOB are being felt across the board.

Granular urea, with the exception of the tonnage already approved for export, appears to be scarce for export. Reportedly, the government has made it clear to granular producers that their product needs to stay in the country, not only for direct application, but also for NPK production.

Middle East:

Arab Gulf producers remain busy fulfilling orders from the Indian tender and covering contracts. No new spot deals were confirmed, leaving the price steady at $545/mt FOB.

Egyptian sales have slowed down. After a furious week of price rises to $760/mt FOB, sources said the only confirmed deal this week was $765/mt FOB for 7,000 mt from Helwan to a European buyer for September shipment.

Rumors of $790/mt FOB deals also circulated, but sources said nothing has been done yet at this level. Traders expect to see $790/mt FOB within a week, however, to be quickly followed with deals at $800/mt FOB and up by the end of the month.

Brazil:

Urea prices in Brazil edged up, with deals reported at $660-$675/mt CFR. Rumors of pressure to hit $680/mt CFR circulated throughout the global urea market.

Sources said the lower end of the price range reportedly came from holders of urea liquidating their stockpiles to make room for new material. The tonnage at that price, said sources, was limited and likely to be exhausted quickly.

Reportedly, some buyers are holding off until the fourth-quarter demand for urea becomes clearer. As the agriculture numbers become public, buyers may begin taking positions for their needs. Once started, this move could signal more price increases.

The Rondonopolis price is pegged at $785-$820/mt FOB ex-warehouse. Sources said some deals are being discussed at sub-$700/mt FOB, but they appear to be few and reflect holders liquidating their stocks to make room for new material.

Urea imports for January-July 2022 were reported at 3.8 million mt by Trade Data Monitor, down 8.7% from the 4.1 million mt imported during the same period in 2021. Oman topped the supplier list, sending 814,000 mt. Nigeria was second with 736,000 mt, followed by Qatar with 677,000 mt and Russia with 625,000 mt.

July 2022 imports were reported at 670,000 mt, up 5% from the 637,000 mt imported in July 2021. Russian urea accounted for 20% of the imports in May at 137,000 mt. Nigeria was a close second with 131,000 mt, accounting for 19.6% of the import market. Qatar sent 113,000 mt, Oman 125,000 mt, and Iran 99,000 mt.

Thailand:

Urea imports in Thailand for the first half of the year were reported at 948,000 mt by Trade Data Monitor, down from the 1.19 million mt imported during the same period in 2021. The top three suppliers – Saudi Arabia, Qatar, and Malaysia – accounted for 82% of all imports. Second-quarter 2022 imports were reported at 670,000 mt, down from last year’s 844,000 mt.

June 2022 imports were reported at 300,000 mt, down marginally from the 302,000 mt imported in June 2021.

Turkey:

Urea imports for the first six months of the year were reported at 1 million mt by Trade Data Monitor, down about 30% from the 1.4 million mt imported during the first semester of 2021. Second-quarter 2022 imports were pegged at 477,000 mt, down from 675,000 mt during the same period in 2021.

June 2022 imports were reported at 181,000 mt, down from 206,000 mt in June 2021. Oman topped the list of suppliers with 73,000 mt, for 40% of the imported urea. Russia came in second with 51,000 mt, for another 28% of the market. This amount from Russia was its largest cargo to Turkey so far this year.

Combining the Russian urea with product from other countries along the Black Sea, the group accounted for 47% of all urea imports in Turkey during June.