Cornbelt:
The NPSZ market was pegged at a firm $750-$780/st FOB in the Cornbelt, depending on location.
All posts by mickeybarb@charter.net
Sulfate of Potash
US Imports:
SOP imports dropped 36.3% in July-March, to 79,460 st from the prior-year 124,734 st. Imports were down 13.3% in March, falling to 9,762 st from the year-ago 11,262 st.
US Exports:
March SOP exports were reported at 4,859 st, a 2.8% increase from the year-ago 4,728 st. Exports slipped to 41,410 st for July-March, however, down 12.3% from 47,210 st in the prior July-March.
Eastern Canada:
The SOP market in Eastern Canada remained at C$1,273-$1,280/mt FOB in mid-May.
SOP Magnesia
Eastern Canada:
SOP Magnesia pricing slipped to C$758-$760/mt FOB in Eastern Canada.
Potassium Thiosulfate
Crops/Weather
Eastern Cornbelt:
Summer-like temperatures in the upper-70s and low-80s triggered a number of strong thunderstorms in the Eastern Cornbelt during the week. The first caused numerous power outages across central Illinois on May 7, while forecasts warned of potentially severe storms in all three states late in the week.
Corn planting as of May 7 jumped to 73% complete in Illinois, well ahead of the five-year average and significantly ahead of Indiana’s 36% and Ohio’s 11% progress. Soybean planting in Illinois was also tracking well ahead of normal at 66% complete, compared with 33% in Indiana and 16% in Ohio.
Western Cornbelt:
Mostly dry weather was reported across central Iowa during the week, allowing growers to make significant strides on spring planting as temperatures climbed into the 80s across the state.
Forecasts warned of hail and damaging winds as a line of thunderstorms pushed through parts of Iowa on May 11-12. Strong storms also hit parts of western Nebraska as the week progressed, with forecasts warning of potentially heavy rain, hail, and damaging winds on May 11.
Strong thunderstorms early in the week caused some structural damage in parts of northwestern Missouri, with at least three tornadoes confirmed in northern Missouri on May 6.
After a flurry of fieldwork in early May, corn planting surged to 92% complete in Missouri, 70% in Iowa, and 56% in Nebraska by May 7, with all three states ahead of their five-year averages. Soybean planting was also ahead of schedule at 50% complete in Missouri, 49% in Iowa, and 36% in Nebraska, while Missouri’s rice and cotton planting had progressed to 85% and 40%, respectively.
Northern Plains:
Cool, rainy weather was reported across the Dakotas late in the week. Scattered thunderstorms also moved through Minnesota during the week, though midweek highs reached the 80s in parts of the state.
A slow-moving storm dropped several inches of rain in southern Minnesota on May 11, prompting a flash flood warning in several counties.
The combination of frequent showers, cool temperatures, and above-average snowpack has delayed spring planting in the Northern Plains, particularly in North Dakota. “Things are just getting started in western and central North Dakota,” reported one contact. “It’s very wet. We just had another three inches of rain, so we’ll see how soon we get going.”
Corn planting as of May 7 was 38% complete in Minnesota, 26% in South Dakota, and just 1% in North Dakota, with soybean planting estimated at 10-13% complete in South Dakota and Minnesota.
Sugar beet planting lagged significantly at just 23% complete in Minnesota and 1% in North Dakota, well behind the 44-45% average for those two states. The oats crop was 55% planted in South Dakota by May 7, compared with 36% in Minnesota and 6% in North Dakota.
The planting of spring wheat and barley was also delayed, with progress estimated at 7-9% in Minnesota and 6-10% in North Dakota. South Dakota growers, by contrast, had fully 56% of the spring wheat seeded by May 7.
Northeast:
Summer-like weather settled in for much of the Northeast as the week progressed, with highs reaching the 80s across New England, New York, Pennsylvania, and Maryland.
Mostly dry conditions helped advance spring planting in the region, with 17% of Pennsylvania’s corn crop seeded as of May 7. Rain was likely over the coming weekend, however, as a cold front was taking aim at the region on May 12-13.
Sources reported firming prices for urea, with phosphates and potash straying strong as well. “I still expect to see a good bit of spring demand over the next couple of weeks,” said one Pennsylvania contact. “We are not having any supply/logistic issues.”
Eastern Canada:
Warm temperatures and frequent showers were reported across Ontario during the week, further delaying spring planting after heavy rain the previous week. Some parts of the province were starting to move again as the week progressed, however.
The heavy precipitation has caused water levels in Lake Ontario and the St. Lawrence River to rise roughly 0.4-0.6 inches per day in recent weeks, prompting concerns about coastal flooding in some communities. The water level rise is still below the record-highs observed in 2017 and 2019, however.
Flood warnings were also posted in some areas of Quebec after heavy rainfall earlier in May. Parts of Nova Scotia were under winter storm warnings early in the week, with 20-30 cm of snow expected over the Cape Breton Highlands.
Transportation
US Gulf:
Maintenance underway at Algiers Lock is scheduled to continue through May 26, shutting the site to navigation Monday through Saturday, 6:30 a.m. to 6:30 p.m. Waits were counted up to 15 hours during the week.
Colorado Lock repairs, in progress since December 2022, are set to run through June 2, leaving navigation unavailable daily between 7:00 a.m. and 7:00 p.m. Intermittent delays were reported in a wide 7-36 hour range. Brazos Lock was shut for repairs on May 8-12, leaving travel unavailable between 7:00 a.m. and 7:00 p.m. Delays were counted up to 17 hours.
Intermittent closures were slated to continue at the Morgan City Railroad Bridge, located at the West Canal’s Mile 121, through the end of June. Leland Bowman Lock travel was unavailable on May 9-12, sources said. The shutdown was scheduled to repeat on May 16-18.
Work at Bayou Boeuf Lock, previously scheduled to last through May 19, was reportedly on hold since May 5 due to emergency repairs in the Vicksburg area, allowing daytime navigation to resume through the site.
Wait times at Port Allen Lock were noted up to 24 hours, while Corps data showed intermittent Bayou Sorrel Lock delays in a 6-11 hour range. Boats transiting Industrial Lock were delayed up to 56 hours.
Mississippi River:
Flooding persisted on the Upper Mississippi River, although conditions improved during the week.
Locks began slowly reopening on May 1, sources said, allowing tows to begin pushing north from St. Louis. Locks 16 and 17 remained shut at the start of the week, however, blocking travel at Mile 437. Those locks were expected to reopen as early as May 11, beating a previous May 15 forecast, potentially returning the river to full navigation before the end of the week.
The river gauge at Dubuque, Iowa, posted at a minor-flood 16.95 feet and falling slowly on May 10, was forecast to recede below action stage on May 15. A flood warning was in effect for the area on May 10. The St. Paul gauge was recorded just above the 10.0-foot action stage, at 10.1 feet and falling on May 10.
On the lower river, a flash flood watch was in effect on May 10 for parts of Mississippi and Tennessee due to a potential breach of the Arkabutla Dam, located in Mississippi’s Tate and DeSoto counties.
Ongoing revetment activities at Miles 503-507 could force travel delays, sources said. Work in the area was expected daily from 6:00 a.m. to 6:00 p.m. Rock placement efforts were scheduled to kick off at Miles 931-932 on May 13, limiting southbound travel daily from 7:00 a.m. to 6:00 p.m. through mid-July.
Illinois River:
Rising water levels on the Illinois River allowed lock operators to lower wickets at Peoria Lock and LaGrange Lock, freeing tows to transit both sites without locking. Waits at Peoria Lock stretched to nearly 10 hours while wickets were being lowered.
Planned repairs will completely block navigation through Brandon Road Lock, Dresden Island Lock, and Marseilles Lock starting on June 1, effectively closing the Illinois River to commercial transport through the end of September.
Intermittent 4-15 hour waits were recorded at Marseilles Lock during the week.
Ohio River:
Repairs to the JT Meyers Lock main chamber floating mooring system are scheduled to continue through Aug. 20, prompting intermittent shutdowns. The site’s secondary chamber is set to close Aug. 21 through Sept. 10 for miter gate repairs, after which the primary chamber will shut once more, from Sept. 11 to Nov. 17.
The primary chamber at Dashields Lock, closed since April 24 for maintenance and repairs, is scheduled to return to operation on May 20, seven days earlier than previously scheduled. The closure has inhibited travel to and from both the Allegheny and Monongahela Rivers, sources said. Delays were observed in a wide 7-36 hour range on May 10.
The Melville Lock secondary chamber was reported shut through Aug. 4 for maintenance. At McAlpine Lock, miter gate machinery repairs were expected block travel through the north chamber between May 15 and June 15, consigning travel to the south chamber.
The land chamber at Smithland Lock is due to close Sept. 22 through Oct. 22 for machinery repairs. The Greenup Lock main chamber will shut for planned repairs July 5 through Aug. 14, necessitating detours through the auxiliary chamber. Dam gate repairs at Winfield Lock, set to run July 10 through Sept. 15, were not expected to meaningfully affect navigation.
Guntersville Lock, located on the Tennessee River, was tentatively scheduled to end a period of intermittent daytime shutdowns on May 11. Kentucky Lock waits were counted above seven hours through the week. Wilson Lock travel topped out around eight hours, according to Corps data.
Atlas Agro Plans $850 M Green Fertilizer Plant for Brazil
Swiss-based Atlas Agro, soon after announcing plans for its first green fertilizer plant in the US (GM April 14, p. 1; March 31, p. 1), has turned its focus to Brazil, where it has announced plans to build a US$850 million (R$4.3 billion) plant in Uberaba, Minas Gerais. It expects to start construction in 2024, with completion scheduled for mid-2027.
Atlas Agro plans to be a pioneer in the decarbonization of the fertilizer industry in Brazil and plans to build seven to nine green nitrogen fertilizer plants in the country, helping Brazil reduce its dependence on imported fertilizers.
“Today, we import more than 85% of the fertilizers we use in Brazil, a country that is one of the biggest agribusiness powerhouses in the world,” said Knut Karlsen, Co-Founder and CEO of Altas Agro for Latin America. “The amount is equivalent to more than 8 billion dollars in fertilizers imports for the Brazilian territory.”
The plant will use a 100% clean matrix, from renewable sources such as solar and wind, to produce green hydrogen, green ammonia, and zero carbon nitrogen fertilizers. The renewable energy consultancy Clean Energy Latin America (CELA) was hired to help the company prospect and select renewable energy suppliers for the Uberaba plant.
The plant will have an average consumption of around 300 MW, which can be translated into almost 600 MW of wind installed capacity, or more than 1GW of 100% solar installed capacity.
The factory will also have a production capacity of 500,000 mt/y of fertilizers to serve customers in the region. “We have letters of purchase interest signed with several customers and we should conclude the agreements for the supply of zero carbon nitrogen fertilizers in the coming months,” said Karlsen.
The US project, currently in the engineering design phase, is expected to produce green ammonium nitrate. While the product mix has not been identified for the Brazil plant, the country uses a lot of ammonium nitrate and imports the bulk of it from Russia.
In addition to the US and Brazil, Atlas Agro said it is also working closely with partners on project development in Paraguay.
EU to Start Collecting Greenhouse Emissions Data
Beginning May 10, the European Union started gathering data to assign a fee for carbon and other greenhouse gas emissions on imported goods. The so-called Carbon Border Adjustment Mechanism (CBAM) will be phased in during the next 10 years.
The CBAM is designed to ensure the carbon price for imports is equal to that of EU-produced material. Companies importing fertilizers and other goods will need to begin reporting direct and indirect emissions of their goods beginning Oct. 1. The reporting process will end Jan. 31, 2024.
After the initial reporting period, the EU will analyze the data and come up with an appropriate carbon tax. The system is designed to go into effect in January 2026. At that time, importers will declare their imports of the previous year and the estimated greenhouse gas emissions related to those imports. Carbon-tax certificates will be calculated from weekly auction prices in Euros per CO2 metric tons emitted.
Initial collection of data will include fertilizers, cement, and electricity. The plan calls for most industries to be included in the CBAM by 2030.
Price Declines Impact SABIC Agri-Nutrients Co.’s 1Q
SABIC Agri-Nutrients Co. Ltd., Riyadh, reported a 61% decline in net profit after Zakat and tax to SR981 million (approximately $263.1 million at current exchange rates) for the first quarter ended March 31, 2023, down from the year-ago SR2.51 billion, according to a company filing to Saudi Arabia’s Tadawul stock exchange.
The company saw comprehensive net income for the quarter fall to SR966 million from SR2.58 billion a year ago, while profit per share fell to SR2.06 from SR5.28.
First sales totaled SR2.76 billion, a 41% drop on the prior-year’s SR4.66 billion.
SABIC Agri-Nutrients attributed the profits and sales downturn to “an almost 40%” decrease in the average selling prices of the company’s products compared with a year ago.
Its fully owned subsidiaries include National Chemical Fertilizer Co. (Ibn Al-Baytar) and SABIC Agri-Nutrients Investments Co. It also owns a 50% stake in Al-Jubail Fertilizer Co. (Al Bayroni), and a 33.33% holding in Bahrain-based nitrogen fertilizer producer Gulf Petrochemicals Industries Co. (GPIC). Its product portfolio includes ammonia, urea, DAP, and specialized fertilizer.
SABIC Agri-Nutrients Co. last month completed the procedures to acquire 49% of the share capital of Dubai-based agri-nutrient blender and distributor ETG Inputs Holdco Ltd. (GM April 14, p. 25). It also owns minority interests in Yanbu National Petrochemical Co. (1.69%) and in Arabian Industrial Fibers Co. (3.87%).
SABIC Agri-Nutrients Co. is 50.1% owned by Saudi Basic Industries Corp. (SABIC).
CF Results Beat 1Q Estimates
CF Industries Holdings Inc.’s first-quarter net earnings of $560 million on revenues of $2 billion beat the average analyst estimates (Bloomberg Consensus) of $477 million and $1.87 billion, respectively. Adjusted EBITDA came in at $866 million, just shy of the analyst projection of $867 million.
While besting analysts, CF still fell way below its year-ago performance, which included net earnings of $883 million on sales of $2.87 billion and adjusted EBITDA of $1.65 billion. CF said first-quarter average selling prices were lower than 2022 due to higher global supply availability, as lower global energy costs led to increased global operating rates. Sales volumes in the first quarter of 2023 were lower than 2022, as lower UAN, ammonia, and AN sales volumes were partially offset by higher granular urea sales volumes.
“Agricultural purchases in North America took a wait-and-see approach as global nitrogen values fell and weather patterns did not support an early spring,” Bert Frost, CF Senior Vice President, Sales, Market Development and Supply Chain, told analysts. He added that several large importing regions were essentially absent from the market during the quarter as well, most notably India, which only had one tender during the quarter in large part due to higher domestic operating rates.
However, Frost said pricing in North America has risen as demand emerged and all products have started to move at a more normal rate. He noted that CF is on allocation at Port Neal and the plant is producing every day at maximum rates.
“So product is tight,” said Frost. “We don’t believe there is going to be enough urea, we believe that we’ll have to be migrating for second, third applications to ammonia and UAN, and we’re preparing for that with positioning product throughout the system and pricing has extended from the normal spread of NOLA, let’s say $30 to the Midwest, it’s between $50-$100 today, and will probably go up towards the higher end as we get to peak applications.”
CF President and CEO Tony Will added that CF’s in-market premium is heightened as logistics costs and delays in timing have gone up across the board, citing barge traffic impacted by higher water levels and a national shortage of over-the-road drivers.
Frost said the US is now the highest priced market in the world, and the company thinks that is going to extend through to the second quarter. As a result, he said inventories will be drained, positioning well for the third quarter.
“Despite downward pressure in the global nitrogen market compared to the unprecedented pricing environment in 2022, industry fundamentals remain positive and forward global energy curves suggest attractive margin opportunities for our cost-advantaged network for the foreseeable future,” said Will. “As a result, we expect to continue to drive strong cash generation, enabling us to create long-term shareholder value through disciplined investments in clean energy, inorganic growth opportunities and returning substantial capital to shareholders.”
CF added that it will take at least two years of harvests at trend yield to fully replenish global grain stocks, supporting strong grains plantings and incentivizing nitrogen fertilizer application over this time period. It noted that the USDA is projecting 92 million acres of corn and nearly 50 million acres of wheat to be planted in the US in 2023.
Quizzed about lower corn prices, Frost said $5.25 per bushel corn is still “incredibly profitable,” with the company estimating 2023 to be the third most profitable year for corn after 2022 and 2021.
Going forward, Will does not see Europe returning to higher operating rates. “We think it is going to be spotty,” he said, adding that he expects Europe to continue to evaluate and look at bringing in more urea and UAN as an alternative to locally produced nitrates.
“Today, I would say that the cost of ammonia is probably $550-$600/mt, where you can import for substantially less, so it makes sense, and that then supports the global price of ammonia,” said Frost, referring to European ammonia production. “So, I think that these trends only continue and get worse as we hit winter.” In the meantime, CF noted that US natural gas prices have continued to go down, which bodes well for second-quarter results.
As for Chinese urea exports, Frost does not see a significant amount of exports, estimating that that the country only has 3-5 million mt that could be exported beyond what it needs for its domestic market.
In other news, CF touted its first-quarter announcement that it plans to purchase the Waggaman, La., ammonia plant from Incitec Pivot Ltd. (GM March 24, p. 1), and its growing list of blue and green ammonia projects (GM April 28, p. 1).
| Production (000 st) | 1Q-23 | 1Q-22 |
| Ammonia | 2,359 | 2,613 |
| Gran Urea | 1,211 | 1,074 |
| UAN 32 | 1,598 | 1,865 |
| AN | 388 | 405 |
| Ammonia | 1Q-23 | 1Q-22 |
| Net Sales ($/M) | 424 | 640 |
| Gross Margin ($/M) | 144 | 360 |
| Sales Volumes (000 st) | 652 | 727 |
| Avg Selling Price ($/st) | 650 | 880 |
| Gas Costs ($/mmBtu) | 6.62 | 6.48 |
| Gran Urea | 1Q-23 | 1Q-22 |
| Net Sales ($/M) | 611 | 765 |
| Gross Margin ($/M) | 284 | 495 |
| Sales Volumes (000 st) | 1,323 | 1,096 |
| Avg Selling Price ($/st) | 462 | 698 |
| UAN | 1Q-23 | 1Q-22 |
| Net Sales ($/M) | 667 | 1,015 |
| Gross Margin ($/M) | 321 | 670 |
| Sales Volumes (000 st) | 1,662 | 1,828 |
| Avg Selling Price ($/st) | 401 | 555 |
| AN | 1Q-23 | 1Q-22 |
| Net Sales ($/M) | 159 | 223 |
| Gross Margin ($/M) | 55 | 52 |
| Sales Volumes (000 st) | 374 | 428 |
| Avg Selling Price ($/st) | 425 | 521 |
| Other | 1Q-23 | 1Q-22 |
| Net Sales ($/M) | 151 | 225 |
| Gross Margin ($/M) | 59 | 121 |
| Sales Volumes (000 st) | 524 | 545 |
| Avg Selling Price ($/st) | 288 | 413 |