All posts by mickeybarb@charter.net

Growmark, CHS Launch Capital Fund Aimed at Ag Tech Startups

Eastern Cornbelt, Featured, News, Northern Plains

Growmark, Bloomington, Ill., and CHS Inc., St. Paul, Minn., on Nov. 17 announced the formation of Cooperative Ventures, a new $50 million capital fund that will focus on creating advancements in breakthrough technologies for the agriculture industry.

The fund will provide differentiated value to startups in the agricultural ecosystem by leveraging the connected networks and farmgate access of the two agricultural cooperatives, which have a combined market covering millions of acres and thousands of farmers.

Both companies will be equal partners in the fund, which will be established as its own separate legal entity. Cooperative Ventures has identified three core investment areas, or “Fields of Play,” to maximize the impact of each investment: crop production, supply chain, and sustainability.

“This is a terrific opportunity to act cooperatively by working together on a venture meaningful to agriculture and our corresponding supply chains,” said Growmark CEO Jim Spradlin. “Both Growmark and CHS have trusted relationships and expertise within our networks, which will provide tremendous value for technology startups and ultimately benefit our respective customers. This is a natural evolution of Growmark’s AgValidity trial and testing program.”

Growmark and CHS said they will provide tech startups unprecedented access to robust distribution capabilities within multiple value chains, allowing for opportunities to test and refine at different scales. Special attention will be paid to the strategic fit of each startup with both Growmark and CHS.

Other factors will be based on the drive to lead in the startup space, the ability to deliver value and quality, the experience of management, and the ability to take a product or service to market. Cooperative Ventures will be comprised of teams based in both Bloomington and St. Paul.

“This partnership will help accelerate technology solutions to existing and emerging challenges in agriculture and is yet another way CHS creates connections to empower agriculture,” said Jay Debertin, President and CEO of CHS. “Our ongoing commitment to investment in growth and innovation for the benefit of CHS owners and the cooperative system further places CHS and Growmark at the forefront of cutting-edge technology solutions by leveraging our deep expertise and strong connections with farmer-owners.”

Strike Ends at John Deere; Union Workers Approve Third Agreement

News, News Briefs, U.S.

More than 10,000 union workers at 14 John Deere plants in Iowa, Illinois, Kansas, Colorado, and Georgia approved a tentative deal with the company on Nov. 17, putting an end to a strike that began on Oct. 14 and threatened to worsen farm machinery supply chain disruptions (GM Oct. 15, p. 1).

The agreement, which will increase pay and boost retirement benefits, was supported by 61 percent of United Auto Workers, with 39 percent voting to reject the agreement. The strike was the first at the Moline, Ill.-based Deere & Co. since 1986. Union workers had rejected two earlier offers.

“I’m pleased our highly skilled employees are back to work building and supporting the industry-leading products which make our customers more profitable and sustainable,” said John C. May, Chairman and CEO for Deere. “John Deere’s success depends on the success of our people. Through our new collective bargaining agreements, we’re giving employees the opportunity to earn wages and benefits that are the best in our industries and are groundbreaking in many ways. We have faith that, in return, our employees will find new and better ways to improve our competitiveness and transform the way our customers do their work.”

The agreement is a six-year contract that will increase worker wages by 10 percent in the first year and then 5 percent in the third and fifth years, Bloomberg reported. A 3 percent bonus would be paid in the even years of the contract based on prior-year earnings, and each worker will receive an $8,500 signing bonus.

“John Deere and Company has made a last, best, and final offer to the UAW negotiating team that includes modest modifications to the last tentative agreement presented for ratification on Nov. 2,” the UAW said in a statement before the Nov. 17 vote. “As a result, the UAW will present the company’s offer for ratification and, as has been the case throughout the bargaining process, will support the outcome as determined by our members.”

The final agreement was similar to the second that was rejected by 55 percent of union workers on Nov. 2, with the latest proposal offering modest changes to the details of Deere’s internal incentive pay program for workers. Deere officials had told the union not to expect more money after the last vote on Nov. 2, the Associated Press reported, and the company largely struck to that promise in its latest offer.

Deere’s shares climbed the most in two weeks with the end of the strike, rising as much as 3.5 percent, the most since Nov. 1, Bloomberg reported.

The strike occurred five months after Deere’s stock hit an all-time high of just over $400.34 per share, according to Bloomberg (GM Oct. 22, p. 1). According to its third-quarter earnings report on Aug. 20, the company reported net income of $1.6 billion, up from $811 million one year earlier. Worldwide net sales and revenues increased 29 percent during the quarter to $11.5 billion, and net sales of the equipment operations totaled $10.4 billion.

Canpotex Potash Being Re-Routed; State of Emergency Declared in British Columbia

Featured, News, Potash Muriate, Vancouver

Canpotex Ltd., which exports potash on behalf of Nutrien Ltd. and The Mosaic Co., confirmed on Nov. 18 that it was looking to re-route its potash exports as a result of massive flooding in British Columbia. “We’re actively pursuing alternative routes to ship our potash overseas, for example, to our terminals in Portland, Oregon, and Saint John, New Brunswick,” a Canpotex spokeswoman told Bloomberg.

Vancouver, a crucial potash and sulfur export port, was cut off from the rest of the country by land after days of storms caused flooding and mudslides that blocked major highways and rail lines. Water and landslides have blocked the tracks of the nation’s two major railways and washed away parts of its main east-west road artery, the Trans-Canada Highway.

British Columbia officially declared a state of emergency on Nov. 17. “This province-wide declaration will help us with the challenges ahead as we recover from the utter devastation that’s been caused by this natural disaster,” said Mike Farnworth, B.C. Minister of Public Safety and Solicitor General. “Getting our rail and roadways back up and in operation is a top priority, and the declaration will enable us to put the resources in place to make that happen.”

The state of emergency is initially in effect for 14 days and may be extended or rescinded as necessary. The state of emergency applies to the whole province and ensures federal, provincial, and local resources can be delivered in a coordinated response to protect the public, which remains the provincial government’s top priority.

The federal government quickly accepted B.C.’s request for assistance. The Canadian military has already arrived, and more personnel and resources are on the way.

“Our focus is on clearing, repairing, and reopening roads to connect the Interior and the North to the Lower Mainland and Vancouver Island, to get our supply chains moving,” said Rob Fleming, Minister of Transportation and Infrastructure. “We are working closely with multiple partners to make this happen. It is a big job, but collectively we are up to the challenge and will get things opened up again just as soon as we possibly can.”

By late Thursday, weather reports were said to be positive with rain no longer in the forecast.

The situation may obviously cause delays in an already tight international potash market. Canpotex had already reported that it was sold out through December. There was some speculation that if Canadian potash cannot readily find a home offshore, more of it could make its way to the U.S.

And for Canada in general, the blocked highways and rail tracks now threaten the movement of goods ahead of the busy winter holiday season.

EPA Fines Nutrien Ag Solutions Over Dicamba Applications

News, News Briefs, U.S.

The U.S. Environmental Protection Agency (EPA) reported on Nov. 10 that it has fined Nutrien Ag Solutions Inc., Loveland, Colo., for allegedly applying dicamba products illegally on farms in Kansas during 2020 after the product registrations were cancelled by the federal government. EPA said the company will pay $668,100 in penalties.

“It’s critical that pesticide applicators follow labeling requirements to prevent off-site movement of pesticides that can damage non-target crops,” said Acting EPA Region 7 Administrator Edward H. Chu. “This enforcement action demonstrates the agency’s commitment to ensuring the safe use and distribution of pesticide products.”

In 2020, EPA canceled the use of certain pesticides containing dicamba in response to a Ninth Circuit Court order vacating the registration of those pesticides (GM June 5, 2020) due to reports of crop damage from drift. In its cancellation order, EPA said that farmers could use their existing stocks of three pesticides containing dicamba until July 31, 2020, but that applicators must adhere to all product labeling requirements.

According to EPA, Nutrien Ag Solutions violated the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) when it allegedly used two dicamba products in a manner inconsistent with the approved label on at least 27 occasions. Further, EPA alleged that the company violated the law on 33 occasions when it applied other dicamba products on multiple Kansas farms during periods of high winds in violation of pesticide label requirements.

EPA said Nutrien Ag Solutions has taken steps to address the alleged violations, including conducting training on pesticide applications, working with pesticide applicators to comply with label and other requirements, and improving its recordkeeping practices.

Coromandel Announces New Sulfuric Acid Plant

India, News, News Briefs, Phosphate, Phosphoric Acid, Specialty, Sulfuric Acid

Phosphate, pesticide, and specialty fertilizer producer Coromandel International Ltd., Hyderabad, India, on Nov. 16 announced plans to build a new sulfuric acid production facility onsite at the company’s fertilizer production facility in Visakhapatnam, located in Andhra Pradesh state.

The INR 400 crore ($53.8 million) plant will feature a nameplate 1,650 mt/d production capacity, lifting Coromandel’s total sulacid capacity to approximately 1.1 million mt/y. Coromandel will partner with Monsanto Enviro-Chem Systems (MCES) and ThyssenKrupp Industrial Solutions (TKIS) on the project.

“Considering the essential nature of fertilizers, this investment will improve the self-sufficiency and availability of phosphatic fertilizer in the country,” said Coromandel Executive Vice Chairman Arun Alagappan.

“India is a net-importer of sulfuric acid, and the third largest importer globally, accounting for close to 20 lakh (2 million) mt of imports,” Alagappan said, adding the new production plant was “in line with the vision of our honorable Prime Minister for import substitution and promotion of local manufacturing.”

India’s second-largest phosphate manufacturer, Coromandel produces 1.3 million mt/y of complex fertilizers, as well as 400,000 mt/y of phosphoric acid, the company said.

SQM Reports Surge in 3Q Net Income; Still Misses Analysts’ Estimates

Chile, Earnings, News, Potassium Nitrate, Specialty

SQM, Santiago, reported a big jump in third-quarter net income to $106.1 million ($0.37 per share), up from $1.7 million ($0.01 per share) a year ago. But net income missed the average analyst estimate of $135.2 million, according to a Bloomberg Consensus (range $110.0 million to $179.0 million).

Gross profit increased 96 percent, to $224.8 million from $114.8 million, while adjusted EBITDA was up 72 percent, to $250.9 million from $146.2 million.

Revenues for the quarter grew 46 percent to $661.6 million, up from $452.9 million.

SQM took a $62.5 million hit in third-quarter 2020 from a class action settlement related to alleged noncompliance with securities laws and regulations in the U.S. in connection with disclosures made by the company. The amount paid was reflected as an expense in the third-quarter 2020 financial statements (GM Nov. 20 & 13, 2020).

For the nine-months to Sept. 30, 2021, the company posted a 170 percent rise in net income to $263.9 million ($0.92 per share) from the prior-year $97.5 million ($0.37). Gross profit moved up 56 percent, to $547.3 million versus $350.4 million the previous year, while nine-month adjusted EBITDA moved up 44 percent, to $626.0 million from  the year-ago $433.6 million

Revenues for the nine-month period increased 36 percent, to $1.78 billion from $1.30 billion.

“We reported a significantly higher net income for the nine months when compared to the similar period of 2020. These results were driven by much higher sales volumes in lithium, iodine, specialty plant nutrition, and potassium business lines, as well as higher realized prices in all our business lines,” said SQM CEO Ricardo Ramos on Nov. 17.

“The expansion of our lithium operations is yielding positive results, letting us increase our sales volumes more than 80 percent when compared with last year,” he continued. “We already are producing at rates higher than 120,000 mt/y of lithium carbonate, while we continue working to reach the 180,000 mt/y capacity next year,” adding that the company expects to sell almost 100,000 mt/y of lithium carbonate equivalent this year, and is looking forward to growing those sales volumes in 2022.

Ramos also highlighted that as a result of the existing shortage of potash and potassium-based fertilizers and the significant increase of global potassium prices, the company reported a more than 65 percent increase of its average price in the potassium business line during the third quarter when compared to the same period last year.

SQM sees the positive trends being seen in each of the markets in which it participates, along with the expiration of legacy lithium contracts, are leading the company to reach “record-level” results in the fourth quarter of this year, with “significantly higher EBITDA.” Third-quarter revenues for the Specialty Plant Nutrition (SPN) business moved up 31 percent on the year, reaching $229.2 million, up from $174.8 million. Nine-month revenues increased 23 percent, to total $640.5 million compared with the year-ago $522.6 million.

SPN sales volumes for the third quarter were up 8 percent to 292,800 mt from 270,000 mt, while nine-month sales volumes increased 13 percent, to 869,500 mt from 771,200 mt.

SQM expects that total annual sales volumes for SPN could increase by about 5-7 percent in 2021 compared with last year.

“Due to export restrictions on nitrogen products in certain markets and continued logistics interruptions, we are seeing a meaningful shortage of potassium and sodium nitrate products globally,” the company said.

“That, coupled with a significant increase of potash and ammonia prices, has resulted in higher average prices of potassium nitrate with our average prices increasing over 20 percent in the third quarter compared to the same prior-year period.”

Given the current market conditions, SQM anticipates that the company’s average potassium nitrate price will continue to increase in the coming quarters, reaching over $1,000/mt in the fourth quarter.

But the company sees slightly lower potassium nitrate demand growth in 2021 compared with its previous estimates, and now sees demand growth of about 3 percent this year.

SPN sales volumes

‘000 mt 3Q-2021 3Q-2020 % change 9M-2021 9M-2020 % change
Sodium nitrate 3.8 6.0 (38) 19.3 18.8 +3
Potassium nitrate and sodium            
Potassium nitrate 147.3 138.2 +7 484.7 438.5 +11
Specialty blends 102.9 89.3 +15 241.9 193.5 +25
Other specialty plant nutrients1 38.8 36.5 +6 123.5 120.4 +3
Total SPN sales volumes 292.8 270.0 +8 869.5 771.2 +13

1 Includes trading of other specialty fertilizers

SQM’s Potassium Chloride and Potassium Sulfate (MOP and SOP) business in the third quarter saw revenues increase by 35 percent to $88.7 million, up from $65.5 million. Nine-month revenues were up 45 percent, to $208 million from the year-ago $143 million.

However, potassium chloride and potassium sulfate sales volumes in the third quarter fell by 18 percent on the same year-ago period, declining to 201,800 mt from 247.5 million mt.

For the nine-months, sales volumes increased 22 percent, reaching 588,600 mt, up from 482,100 mt.

Ramos told participants at the company earnings call on Nov. 18 that SQM “was doing its best in order to increase volumes during the fourth quarter.

“We are using some inventories in order to increase the volume during the fourth quarter, and now expect fourth-quarter total potassium volumes to be close to 300,000 mt,” he said, adding that level might be a bit lower depending upon whether “one or two shipments” may be delayed from the fourth quarter to the first quarter of next year, depending on the conditions at the port.

For 2021 as a whole, the company said it expects to sell close to 900,000 mt of potassium chloride and potassium sulfate.

SQM put its average realized price for MOP/SOP in the third quarter at almost $440/mt, an increase of over 66 percent compared to the same year-ago period. The company now expects its average MOP/SOP prices to reach close to $700/mt in the fourth quarter.

Regarding an analyst’s question about potash volumes next year, Ramos said the company does not have a forecast. He reminded that from total production in the Salar de Atacama, SQM uses most of the potash for the production of potassium nitrate, either for fertilizer or for the solar salt business.

“So it depends on what our strategy will be in specialty fertilizers and solar salt next year, and on the total production from the Salar de Atacama, and what will remain will be potash we sell to the market,” he said.

As part of its Sustainable Development Plan goals outlined late last year, which include a significant reduction in the use of continental water and brine extraction, SQM is reducing the pumping of solutions from the Salar de Atacama. The biggest reduction will be in 2022 as compared to this year, and in 2023 through 2025.

“We will have small reductions in these years, but the most important one will be in the first year, i.e. 2022. Total production of potash at the Salar de Atacama will be between 100,000 and 150,000 mt lower next year,” said Ramos.

From a total production level of close to 1.25 million mt, the company will move to 1.1 million mt total production for next year, he said, adding that the reduction could be closer to a 200,000 mt reduction.

Most of the reduction will be reflected in the potash industry, given the company’s first priority is to use the potash for potassium nitrate production and solar salt business, said Ramos

“Going forward [from 2022], because of the reduction in pumping, potash reductions will be in the range of 40,000 mt/y,” he said.

Yara to Start Operating First Fully Emission-Free Container Ship

Featured, News, Scandinavia

The world’s first fully electric and self-propelled container ship – the Yara Birkeland – has departed for its maiden voyage in the Oslo fjord.

The ship will cut 1,000 mt of CO2 and replace 40,000 trips by diesel-powered trucks a year, said Yara International ASA President and CEO Svein Tore Holsether in a Nov. 19 statement announcing the maiden voyage.

The Yara Birkeland was developed in collaboration with the Kongsberg Group, a global maritime technology company based in Norway, and responsible for the development and delivery of key technologies on the vessel (GM May 12, 2017; Aug. 17, 2018).

The ship was built by Vard, Brevik, Norway, with financial support from the Norwegian government enterprise Enova, and will be in commercial operation from 2022.

Ammonia

Ammonia, Black Sea, Eastern Cornbelt, India, Market Watch, Middle East, North Africa, Northwestern Europe, South Central, South Korea, Southern Plains, Tampa, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa:

Tampa for November continued to be called $825/mt CFR, with expectations for a higher number for December due to strong international, inland, and NOLA prices. NOLA barges continue to be pegged at $1,030/st FOB.

Eastern Cornbelt:

Sources reported brisk fall ammonia applications in the region at mid-month, with supply outages confirmed at multiple terminals. One source predicted that fall ammonia volumes will be “hugely” up from normal rates thanks to a generally favorable forecast for the rest of the month, with availability of tons being the limiting factor.

Ammonia pricing in the Eastern Cornbelt firmed again in mid-November, with new prompt prices quoted in the $1,280-$1,350/st FOB range out of regional terminals, up significantly from the prior week’s $1,150-$1,210/st FOB. Sources reported the low end of the range at East Dubuque, Ill., and the high at Huntington, Ind.

Most Illinois ammonia terminals that actually had prompt tons available during the week were firmly at the $1,300/st FOB level, sources said, with the Lima, Ohio, market also pegged at $1,300/st FOB, up from $1,200/st FOB the previous week.

Western Cornbelt:

Sources reported a heavy fall ammonia application pace during the week. The prompt market firmed to $1,280-$1,350/st FOB in the Western Cornbelt, up from the prior week’s $1,185-$1,200/st FOB range, with the low reported in Nebraska and the high at Wever, Iowa, and other Iowa terminal locations.

Southern Plains:

Some brisk fall ammonia application was taking place in some areas of the Southern Plains in mid-November. Sources quoted the last prompt pricing at $1,125-$1,150/st FOB Oklahoma production points for truck tons, but several locations had reportedly pulled offers and were no longer quoting prompt tons at midweek.

South Central:

The ammonia market remained at $850-$950/st FOB Gulf Coast terminals for truck offers in mid-November, depending on location, with the high reported at Donaldsonville, La., and the low at Beaumont, Texas. No current offers were on the table at El Dorado, Ark., Cherokee, Ala., or Midway, Tenn.

Black Sea:

Rumors are circulating that Rossosh and Trammo are working on a deal, but what and when are still unclear. Sources reported Trammo has quietly added a couple of as-yet unnamed vessels for 10,000 mt each in its line up out of Yuzhnyy.

Sources reported a deal did go through to Pekim in Turkey at $925/mt CFR. That equates to a netback to Yuzhnyy of $890-$895/mt FOB.

Ammonia production remains affected by the high price of natural gas. Sources said there is enough to run the plants, but the price of the gas outstrips what producers are able to get for their ammonia. For now, the emphasis remains covering contracts and selling any small volumes of excess tons at ever-higher prices.

India:

The main activity remains purchases under long-term contracts. However, sources said buyers were scouting out tons from any potential seller.

Sources said buyers are looking to secure tons from Malaysia at $700/mt FOB, a level Trammo earned earlier. The last spot deal into India was about a month ago at $670/mt CFR. Contract prices are below that. The query to the Southeast Asia supplier was a further indication that Indian buyers are slowly but surely returning to the market with the full knowledge that each deal will be more expensive than the previous one.

Middle East:

Reports are coming in that SABIC continues to talk with potential buyers for small cargoes. Reportedly, a deal is ready at $900/mt FOB, but with the buyer unknown.

The rising ammonia prices in the Arab Gulf continue to concern customers in Southeast Asia. Buyers in Taiwan and South Korea, in particular, are said to be worried that once their existing contracts with the Arab Gulf producers expire, the new prices will severely hit their industries.

Sources said the contract price currently reflects a netback to the Arab Gulf around $650/mt FOB or a bit higher, well below the current spot price and any potential new contract price.

Northwest Europe:

Buyers are bracing for higher prices in December. The $905-$907/mt C&F Northwest Europe price reflects the current Baltic price in the low-$820/mt FOB. Sources said once talks for December pricing start, the Baltic price should see a dramatic increase. Once concluded, the new Baltic price will push up the Northwest Europe price.

The hope for renewed production because of lower gas prices was dashed after Germany suspended approval for the Nord Stream gas pipeline. An earlier decision that the pipeline would be approved for operation led Russian leader Vladimir Putin to say more natural gas would be sent into Europe by mid-November, leading to lower gas prices in Europe.

However, the latest decision by German regulators has once again moved up gas prices and prompted European ammonia producers to re-assess their earlier decision to begin opening up again.

North Africa:

Sources said OCP in Morocco continues to have reserves of about 50,000 mt of ammonia on hand, which gives them about 10 days of product at their current production rate.

Usually, the phosphate giant keeps more stock on hand. Sources said some of the issue could be delays getting its product from the Black Sea, however. Reportedly, some of their vessels are being delayed passing through the Turkish straits.

They may also have some storage issues. They are reportedly reworking one of their tanks, with no information on when that work will be concluded.

South Korea:

Ammonia imports for January-October 2021 were reported at 1.2 million mt, up 13 percent from 1 million mt during the same period in 2020, according to Trade Data Monitor. The main supplier was Indonesia at 516,000 mt, followed by Saudi Arabia at 166,000 mt, and Trinidad at 134,000 mt. The Saudi tonnage so far this year is down about 54 percent from the first 10 months of 2020.

October imports were down to their lowest amount for the year at 42,000 mt. This amount is also down about 56 percent from the 95,000 mt imported in October 2020.

UAN

Eastern Cornbelt, Market Watch, South Central, Southeast, Southern Plains, U.S. Gulf, UAN, Western Cornbelt

U.S. Gulf:

NOLA barges continued to be quoted at $545-$550/st ($17.03-$17.19/unit) FOB.

Eastern Cornbelt:

UAN-32 pricing edged higher in the Eastern Cornbelt. Sources quoted the market at $600-$630/st ($18.75-$19.69/unit) FOB regional terminals, up $15-$25/st, depending on location, with the low for prompt tons and the high for spring offers. The Cincinnati UAN-28 market was quoted at $520/st ($18.57/unit) FOB for prompt and $550-$555/st ($19.64-$19.82/unit) FOB spring prepay.

Western Cornbelt:

The UAN-32 market strengthened to $590-$620/st ($18.44-$19.38/unit) FOB in the Western Cornbelt, up $5-$10/st, depending on location and time of shipment.

Southern Plains:

Sources pegged the UAN-32 market in a broad range at $560-$610/st ($17.50-$19.06/unit) FOB in the Southern Plains, with the low for prompt tons out of Gulf Coast terminals in Texas and the high for 1Q pricing FOB Dodge City, Kan. The last offers FOB Oklahoma terminals were reported at $590-$595/st ($18.44-$18.59/unit) FOB.

South Central:

The UAN-32 market in the South Central region was reported at $560-$565/st ($17.50-$17.66/unit) FOB Memphis, up $30-$35/st from last report, with the upper end of the market quoted by Kentucky sources at the $605/st ($18.91/unit) level for prompt tons FOB Ohio River terminals.

Southeast:

UAN-32 prices at terminal locations in the Southeast remained in the $550-$600/st ($17.19-$18.75/unit) FOB range, with the low reported in the Georgia market and the high FOB Wilmington.

Ammonium Nitrate

Ammonium Nitrate, Market Watch, South Central, Southern Plains, Western Cornbelt

Western Cornbelt:

The ammonium nitrate market remained at $640-$680/st FOB in the Western Cornbelt for the last reported offers.

Southern Plains:

Ammonium nitrate prices were firming in the Southern Plains, with the last offers reported at $630-$650/st FOB or higher in Oklahoma, up from $550/st in late October.

South Central:

The latest ammonium nitrate prices in the South Central region were quoted at $630/st FOB Shreveport and $575/st FOB Yazoo City, Miss., for limited tons, up $30-$40/st from last report.