All posts by mickeybarb@charter.net

Yara-Backed Agoro Distributes $9 M

News, News Briefs, Tampa

Agoro Carbon Alliance, Tampa, said on June 8 that it has distributed more than $9 million in payments to U.S. farmers and ranchers in its first year.

“We are extremely proud of the company’s success in the first year,” said Agoro Carbon Interim CEO Elliot Formal. “We have connected with farmers and ranchers throughout the U.S., and look forward to our carbon journey together in the years to come.”

Yara International ASA, Oslo, launched Agoro Carbon last year (GM May 7, 2021) as a global business created for farmers to earn additional revenue from positive climate action. Yara said that by adopting climate-positive practices, farmers can produce Farm Carbon Credits or climate-smart certified crops and help to decarbonize food supply chains.

Agoro Carbon supports farmers with the agronomical expertise and practical support to successfully sequester carbon in the soil and reduce emissions from the field. This in turn generates third-party certified carbon credits and increases farmers’ income.

United States Trade Representative – Management Brief

Management Briefs, U.S.

President Biden announced June 8 that he intends to nominate USDA Advisor Doug McKalip to serve as Chief Agricultural Negotiator with the United States Trade Representative.

“This position is important to corn growers,” said Brooke S. Appleton, Vice President of Public Policy at the National Corn Growers Association. “We are very pleased to see this nomination in place and moving forward, and we look forward to working with Mr. McKalip on some of our key trade issues.”  

McKalip has worked on agricultural policy and trade for over 28 years. He most recently served as Senior Advisor to Secretary Vilsack. The position, which requires a Senate confirmation, is charged with conducting and overseeing international negotiations related to trade in agricultural products.

Russia Considers Extending Fertilizer Export Quotas through May 2023

Featured, News, Nitrogen, Russia

Russia may extend fertilizer export quotas until May 31, 2023, according to an Interfax report on June 6, citing Deputy Prime Minister Viktoria Abramchenko. According to the report, a government commission supports the extension.

The Russian government on May 31 extended the quotas for the export of nitrogen fertilizers and complex fertilizers, with the restrictions to be in effect between July 1 and Dec. 31, 2022 (GM June 3, p. 1).

The previous quotas – applied on exports of nitrogen and complex fertilizers and introduced on Dec. 1, 2021 (GM Nov. 5, 2021) – expired on May 31. For the month of June, producers will be able to export these fertilizer products without limits.

The new quotas to run between July 1 and Dec. 31 are slightly more than 8.3 million mt for nitrogen fertilizers and 5.95 million mt for complex fertilizers, according to the report.

Meanwhile, Russian companies are maintaining their fertilizer output plan for 2022 “at a level not lower than last year’s output of at least 58 million mt,” according to a Tass report this week, citing Russia’s Deputy Minister of Industry and Trade Mikhail Ivanov.

E.U. Adds EuroChem’s Aleksandra Melnichenko to New Sanctions List

Europe, News, News Briefs, Russia

The European Union (E.U.), as part of its sixth sanctions package against Russia and Belarus adopted on June 3, added EuroChem Group AG’s main beneficiary Aleksandra Melnichenko to its list of sanctions against Russia (GM June 3, p. 1), according to the E.U.’s Official Journal, published on June 3.

Melnichenko became the new beneficiary of the trust holding the controlling 90% stake in EuroChem in May (GM May 27, p. 29). Her husband, Russian billionaire Andrey Melnichenko, withdrew as main beneficiary of the group and resigned his position as Non-Executive Director following his inclusion on the E.U.’s expanded sanctions list in March (GM March 11, p. 1).

The E.U.’s decision to sanction Aleksandra Melnichenko puts into question whether Switzerland and Belgium will reverse their recent decisions to lift sanctions on EuroChem.

Certainly, Switzerland’s Federal Council is reported to have adopted the E.U.’s sixth sanctions package, and the country’s Federal Department of Economic Affairs, Education, and Research (EAER) also approved the sanctioning of over 100 further Russian and Belarusian individuals and entities.

According to a Bloomberg report on June 10, Switzerland’s list of sanctioned individuals and entities is identical to that of the E.U.

The Swiss government lifted its sanctions on the Zug-headquartered group following the ownership change, according to an Interfax report, citing Swiss newspaper Tages-Anzeiger.

In line with the charter of Switzerland’s State Secretariat for Economic Affairs (SECO), the organization responsible for monitoring sanctions against Russia, EuroChem’ s bank accounts and payments were unfrozen following the lifting of sanctions.

Swiss banks UBS and Credit Suisse temporarily froze EuroChem’s accounts in March after Andrey Melnichenko was put on Switzerland’s sanctions list.

Following the ownership change, the Belgian government around May 24 allowed EuroChem’s Antwerp plant to restart production, and also for the plant to buy raw materials (GM May 27, p. 29).

A representative for the Melnichenko couple described the E.U. decision to extend sanctions to include Aleksandra as “irrational” because she has never held Russian citizenship or resided in Russia, according to a Reuters report, citing an emailed statement from the representative.

Aleksandra Melnichenko, who was born in Belgrade, Serbia, and holds Serbian and Croatian citizenship, will “vigorously contest the unfortunate decision against her,” according to the report.

Meanwhile, EuroChem has announced the resignation of Kuzma Marchuk as Chief Financial Officer, effective June 1. Marchuk has also resigned from his positions on the group’s Board of Directors.

E.U. Imposes New Direct Sanctions against Belaruskali and BPC

Belarus, Europe, News, News Briefs, Potash

As proposed last month, the European Union (E.U.), as part of its sixth sanctions package against Russia and Belarus, has included direct sanctions against state-run potash producer OJSC Belaruskali and its potash marketing/export arm JSC Belarusian Potash Co. (BPC), the E.U.’s Official Journal reported.

The new sanctions were adopted on June 3 and published in the journal on the same day, bringing the sanctions into force (GM June 3, p. 1; May 6, p. 36).

A full ban on imports of Belarusian potash into the Bloc already is in place, implemented on March 2 (GM March 4, p. 30). The full ban closed loopholes under earlier E.U. sanctions on Belarusian potash imposed in June 2021 that came into force on June 25, 2021 (GM July 2, 2021; June 25, 2021).

Belaruskali’s Director-General Ivan Golovaty was also added to the latest E.U. list of sanctioned individuals. He was among 12 Belarusian individuals to be added, which include a number of representatives of law enforcement agencies and employees in state media.

Six other large Belarusian companies also were put under direct sanctions in this latest package.

The others include Beltamozhservice, Belarus’ biggest logistics operator; Belarusian state-owned oil refiner OJSC Naftan; and OJSC Holding Management Company Belkommunmash, a Belarusian manufacturer of electric public transport vehicles.

Sanctions have also been imposed against Grodno Tobacco Factory Nema, the country’s largest tobacco manufacturer, and private tobacco manufacturer Inter Tobacco LLC, as well as Belarus’ national state television and radio company, Belteleradio.

The European Commission said the additional restrictive measures against Belarus were in view of its involvement in the Russian aggression against Ukraine.

Ukraine Vetoes Belarus’ Offer of Outlet for Grain

Belarus, Featured, News, Russia, Ukraine

Ukraine this week said it is not ready to export grain through Belarus.

Belarus President Alexander Lukashenko last week offered for Ukrainian grain exports to be routed by rail through the country to ports on the Baltic Sea. However, the offer was made only on the basis if Belarus could use German, Baltic, and Russian ports to ship Belarusian goods, including potash.

Russia has blockaded Ukraine’s ports on the Black Sea, which were previously the main export route for Ukrainian grains and oilseeds. The war with Russia has left nearly 25 million mt of grains stuck in silos in Ukraine, including some 20 million mt of wheat, according to a U.N food agency official on May 6, as cited by a Reuters report (GM May 27, p. 1 & p. 32).

Ma’aden Posts Strong 1Q; First Shipments from Ammonia 3

Ammonia, DAP/MAP, Earnings, News, Phosphate, Saudi Arabia

Saudi Arabian Mining Co. (Ma’aden), Riyadh, reported a 246% increase in net profit to SAR2.93 billion (approximately $780 million at current exchange rates) on sales of SAR8.914 billion for the first quarter ended March 31, 2022, up from the year-ago SAR0.85 billion and SAR5.45 billion, respectively.

EBITDA doubled to SAR4.404 billion, up from SAR2.193 billion the previous year. Sales increased by 64%.

The company’s Fertilizer business posted a 207% increase in EBITDA to SAR3.073 billion on a 105% rise in sales to SAR5.536 billion, compared with the same year-earlier period.

In its earnings presentation on June 2, Ma’aden pointed out that its phosphates business contributed 70% to the company’s EBITDA in the first quarter.

DAP production increased to 1.148 million mt in the quarter under review, an increase of 77,000 mt from first-quarter 2021, while ammonium phosphate fertilizer sales were 1.06 million mt, down 20,000 mt year-over-year.

Ammonia production totaled 710,000 mt, a 213,000 mt increase year-over-year, while ammonia sales were 351,000 mt, a year-over-year increase of 92,000 mt.

Ma’aden confirmed its new “Ammonia 3” plant at Ras Al-Khair Industrial City on Saudi Arabia’s East Coast is operational, saying commissioning is on track and trial production ongoing.

At the same time, the Saudi company said production is ramping up at the 1.1 million mt/y capacity plant, and reiterated commercial production is now planned for the third quarter. It expects nameplate capacity to be achieved by the end of this year. It originally had been targeting commercial production to begin in the first quarter of 2022 (GM Aug. 13, 2021; June 18, 2021).

Ma’aden also reported that the first shipments from the Ammonia 3 plant had been made from the new berth. However, industry sources said these shipments are to cover existing contracts, and are not new spot sales.

Sources have reported that some Ammonia 3 material is being discussed for the spot market, but the current asking price is still too high for the market (GM June 3, p. 2)

The company announced the completion of construction and pre-commissioning activities at the new plant in February (GM Feb.11, p. 33).

Croatia’s CERP Offers Petrokemija Stake for Sale

Croatia, News, News Briefs

Croatia’s state-owned fund for enterprise restructuring and privatisation, CERP, is offering for sale its entire interest of 17.9% in the country’s largest fertilizer producer, Petrokemija d.d., according to a SeeNews report, citing the company on June 6.

CERP is offering 9,852,828 shares, at a starting price of 305.4 million kuna (approximately $43.4 million at current exchange rates).

The overall nominal value of the shares is 98.5 million kuna, CERP said in a public call for binding bids for its stake in the company. The deadline to submit binding bids is July 6.

CERP is Petrokemija’s second largest shareholder. Terra Mineralna Gnojiva (TMG) is the fertilizer producer’s largest and controlling shareholder, holding a 54.517% stake. TMG is a joint venture comprising Croatian oil and gas group INA d.d. and Croatian gas company Prvo Plinarsko Društvo.

On Feb. 28, Petrokemija’s shareholders approved a proposal to delist the shares from the Zagreb Stock Exchange in February (GM March 4, p. 31), and on March 10, the Zagreb bourse delisted the shares of the fertilizer producer.

In January, Istanbul-based Yildirim Holding AS submitted a binding bid to acquire Petrokemija. The bid was reported to be valid until Jan. 31, but there has been no further public word since then (GM Jan. 14, p. 30). Yildirim owns the Turkish fertilizer producer Gemlik Gubre and is Turkey’s largest CAN and ammonia producer, and third largest fertilizer and chemicals trading company.

Nutrien to Boost Potash and Nitrogen Production Capability, Share Repurchases

Ammonia, Featured, News, Nitrogen, Potash, Saskatchewan

Nutrien Ltd., Saskatoon, said on June 9 that it plans to increase fertilizer production capability in response to structural changes in global energy, agriculture, and fertilizer markets.

It plans to ramp up potash production capability to 18 million mt by 2025 and continue earlier plans to advance nitrogen capacity. The company also plans approximately $2 billion in additional share repurchases in 2022.

“The challenge of feeding a growing world has never been clearer as global supply constraints have contributed to higher commodity prices and escalated concerns for global food security,” said Nutrien Interim President and CEO Ken Seitz. “There is no simple or fast solution to overcome this challenge, and we see potential for multi-year strength in agriculture and crop input market fundamentals.

“Nutrien’s integrated business is best positioned to respond to these supply challenges and help sustainably feed a growing world,” he added. “We are safely bringing on additional low-cost potash and nitrogen production from our existing facilities, while delivering the products, services, and solutions growers need through our leading global Retail network.”

Nutrien is accelerating the ramp-up of its annual potash production capability to 18 million mt by 2025 in response to the uncertainty of supply from Eastern Europe. This represents an increase of more than 5 million mt, or 40%, compared to 2020 production.

Nutrien said the acceleration pathway is through existing low-cost capacity that is unmatched in the industry and supported by world-class global logistics infrastructure. The incremental production capability is expected to be added at a similar annual pace to the additions over the past two years.

Nutrien said the move to boost production will pay for itself within a year, even if the turmoil in global supply resolves sooner than expected. With potash prices surging, it won’t take long for the company to recoup the $150-$200/mt in capital to bring the additional capacity on earlier, Seitz said in an interview with Bloomberg. “We can be wrong, but we only really need to be right for six months or a year in order to pay for these investments.”

He said fertilizer prices have been soaring after Russia’s invasion of Ukraine. Volumes out of Russia and Belarus – who are among the biggest global producers – are constrained, and “we don’t think that there’s much” moving and “if there is, we’re not sure how,” Seitz said. 

In March, Nutrien announced its intention to move from 14 million mt of production in 2021 to 15 million mt in 2022 (GM March 18, p. 28).

Nutrien Head Economist Jason Newton said on June 8 in a 2002 Market Outlook Session that the company expects Russian potash production to be off 2-6 million mt in 2022 from 2021, and that from Belarus to be down 6-8 million mt.

He said Russian fertilizer is not currently sanctioned directly, but is being constrained by financial sanctions that create challenges to trade, while Belarusian tons are being blocked for export through Lithuania. He said Canadian production is expected to be approximately 2.5 million mt higher, a large year-over-year increase, but only partially offsetting the lost supply in Eastern Europe.

Going forward into 2023-24, Newton expects Russian tons to increase, but an increase in Belarus exports will still be dependent on Lithuania.

To boost production, Nutrien will hire and train approximately 350 people and invest in underground mining equipment, mine development, storage, and loadout capacity. Nutrien continues to evaluate additional low-cost brownfield expansion opportunities beyond 18 million mt at its Saskatchewan mines that would supply longer-term market demand growth.

Nutrien is advancing previously announced nitrogen brownfield expansion projects that are expected to add approximately 500,000 mt of capacity by the end of 2025 and further enhance the energy efficiency and product mix of its plants. It is also evaluating the potential for additional low-cost brownfield expansion and emissions reduction projects, with a final investment decision expected over the next 12 months.

Last month, Nutrien announced that it is evaluating its existing site at Geismar, La., to build the world’s largest clean ammonia facility (GM May 20, p. 1). The project would leverage low-cost natural gas, tidewater access to world markets, and high-quality carbon capture and sequestration infrastructure to serve growing demand in agricultural, industrial, and emerging energy markets.

The plant would have an annual production capacity of 1.2 million mt of clean ammonia and capture at least 90% of carbon dioxide (CO2) emissions, providing a meaningful step towards achieving the 2030 commitments set out in Nutrien’s Feeding the Future Plan.

Nutrien’s annual nitrogen sales volumes could increase to approximately 13.5 million mt by 2027 through the completion of inflight brownfield projects and additional growth projects under evaluation.

Nutrien is also planning to repurchase an additional $2 billion of shares, for a total of approximately $4 billion of repurchases in 2022, under its existing normal course issuer bid. This is expected to increase the company’s total return of capital to shareholders through dividends and share repurchases to approximately $5 billion in 2022.

Ammonia

Ammonia, Eastern Cornbelt, Market Watch, South Central, Southern Plains, Tampa, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa:

Tampa anhydrous ammonia prices were $1,000/mt CFR for June, down $425/mt from May’s $1,425/mt CFR.

Eastern Cornbelt:

The prompt ammonia market was quoted at $1,300-$1,375/st FOB, down from last week’s $1,375-$1,400/st FOB range, with the low confirmed in Illinois and the high at Huntington, Ind., and Lima, Ohio.

Sources reported spotty sidedress demand due to the weather, but activity was steady in areas where field conditions were favorable. “We’re seeing brisk sidedress demand now,” said one Illinois contact. “Most of the corn was planted in a 10-day window, so the sidedress window is equally tight.”

Western Cornbelt:

Sources reported ammonia pricing in the $1,300-$1,355/st FOB range in the Western Cornbelt, down from $1,355-$1,400/st FOB the week before. “There is not much interest in ammonia as it’s too wet in most areas for sidedress to start,” commented one Iowa source at midweek. “Give it another week and we should see ammonia moving.”

“If there is any sidedress demand, sellers are wanting to hold current prices vs. lowering to fill values in advance of sidedress,” added another regional contact.

Southern Plains:

Ammonia pricing in the Southern Plains slipped to $1,100-1,200/st FOB regional production points, down from the last reported $1,200-$1,225/st FOB range, with the low reported in Oklahoma and the high at Coffeyville, Kan.

The truck market FOB Beaumont, Texas, fell to a broad $940-$1,030/st FOB range, depending on timing and destination.

South Central:

The truck market for ammonia reportedly dropped to $940-$1,040/st FOB in the South Central region, well below the $1,300-$1,400/st FOB range reported in May before the sharp fall in June Tampa business. No truck prices were reportedly being offered at El Dorado, Ark., Cherokee, Ala., or Midway, Tenn.