Washington-A May 6 report by President Obama’s Cancer Panel, Reducing Environmental Cancer Risk, What We Can Do Now, has drawn criticism from some medical professionals – in addition to The Fertilizer Institute (TFI) – for overstating the cancer risk posed by chemicals and other hazards in the environment. The 240-page report claims the cancer threat posed by environmental exposures has been “grossly underestimated” in favor of a focus on lifestyle factors and genetic and molecular causes, and refers to “a growing body of evidence linking environmental exposures to cancer.” Dr. Michael J. Thun, vice president emeritus with the American Cancer Society’s Epidemiology & Surveillance Research, faulted the report, however, for being “unbalanced by its implications that pollution is the major cause of cancer, and by its dismissal of cancer prevention efforts aimed at the major known causes of cancer.” Thun said that parts of the Cancer Panel report are “entirely consistent” with positions held by the American Cancer Society, including the risks posed by the accumulation of certain synthetic chemicals in humans and in the food chain, the large number of industrial chemicals that have not been adequately tested, and the possibility that some chemicals or combinations of chemicals may have effects at low doses. The report stumbles, however, when it “restates hypotheses as if they were established facts,” Thun said, and when it makes the charge that environmentally induced cancer has been underestimated. Thun said the report “reflects one side of a scientific debate that has continued for almost 30 years,” and risks trivializing “the importance of other modifiable risk factors that, at present, offer the greatest opportunity in preventing cancer.” The Fertilizer Institute issued a statement the same day as the report’s release (GM May 10, p. 1), taking issue with the report’s references to nitrogen and phosphate fertilizer. TFI said there was no scientific basis for the inclusion of fertilizer in the report, and that all major fertilizer products have been proven safe after rigorous testing. “Further, the references to fertilizer in the report … are contrary to the available body of literature which demonstrates that fertilizers have a positive effect on human health by enhancing the nutritional quality of fruits and vegetables,” TFI said.
All posts by traceybg@gmail.com
New Martin co-gen unit to aid sulfuric acid plant
Kilgore, Texas-Martin Midstream Partners LP told analysts that a new $3.5 million co-generation plant will ensure that the company’s Plainview, Texas, sulfuric acid plant will be completely independent from current electricity providers. The new co-gen unit should be up in the fourth quarter. “We believe this co-generation plant will be a significant insurance policy against future unexpected downtime with our sulfuric acid plant,” said Robert Bondurant, Martin executive vice president and chief financial officer. Electrical outages have been a traditional cause for the plant going offline. In fact, the plant is near the end of the transmission line, making it even more subject to power outages, according to the company. In the first quarter an electrical outage caused by a winter storm took the sulfuric acid plant offline for 65 days, negatively impacting cash flow by $2.4 million (GM May 10, p. 9). The plant came back up March 5. Of the $2.4 million, $1 million was repair and maintenance costs that were scheduled to be done in the fourth quarter. “We will now be able to forego this scheduled fourth-quarter turnaround and its related costs later this year,” said Bondurant. “So a significant amount of lost profits in the first quarter will be made up in the fourth quarter.” Supplementing earnings results reported last week (GM May 10, p. 9), Martin Sulfur Services income increased in the first quarter ending March 31, 2010, to $2.93 million from the year-ago $1.9 million. There was a 23 percent increase in volumes sold, and an average sales price increase of 6 percent. The segment includes both sulfur and fertilizer. Sulfur volumes were 273,200 lt, up from the year-ago 229,200 lt, while fertilizer volumes were 69,700 lt, up from 50,600 lt. First-quarter operating expenses were up 10 percent or $400,000, half of which was for an insurance deductible for hull damage suffered by the Margaret Sue.
Management Briefs
Agrium Advanced Technologies has promoted Jeff Novak to vice president, marketing and innovation. It has also expanded its marketing department to include agronomy, communications, marketing, product innovation, and regulatory affairs. “These changes will allow us to better meet the growing needs of our customers, be more efficient in providing marketing support to our current product lines, and improve our ability to plan and launch future products,” said Andrew Mittag, Agrium AT president.
In his new role, Novak will be responsible for strategic marketing planning and expanding markets for Agrium AT products. He will also oversee the day-to-day operations of the marketing and innovation department.
Novak joined Agrium AT in 2009 as senior director of marketing through the CPS acquisition of UAP. He has more than 20 years of experience in the fertilizer and agricultural products business and has held numerous roles with CPS/UAP, including Northern Plains general manager and national accounts director, and Loveland Products Inc. marketing director. Novak holds a bachelor’s degree in agricultural economics from North Dakota State University in Fargo, N.D.
The Andersons Plant Nutrient Group announced that Matt Anderson has taken over as dry phosphate product manager. Anderson has been with the company for 21 years in a combination of financial and credit management functions. He is replacing Steve Eberly, who earlier this year was named eastern region sales manager for the company (GM Feb. 1, 2010).
Market Watch
AMMONIA
U.S. Gulf/Tampa: The market was quiet leading up to talks about June pricing. Mosaic’s Faustina ammonia plant has returned to production, taking some pressure off the market for the next round of trading.
Ammonia imports were up 11 percent in March, according to the U.S. Department of Commerce (DOC), to 649,399 st from the year-ago 584,980 st. However, July-March was still off 2 percent, to 4.89 million st from 4.97 million st.
Eastern Cornbelt: Sources quoted the anhydrous ammonia market at $440-$480/st FOB regional terminals, with the low end reported out of spot Illinois locations and the upper number quoted out of Indiana terminals. List prices from several regional suppliers remained at the $480/st FOB mark or higher, with some reportedly still indicating no prompt tons for sale after the heavy preplant run.
Western Cornbelt: The spot ammonia market remained in a broad range at $410-$480/st FOB regional terminals, with the low in Nebraska and the upper end in Missouri. Iowa sources pegged the common dealer market in the $425-$450/st FOB range last week.
Northern Plains: Dealers said the heaviest nitrogen run was finished now that most of the region’s corn crop was in the ground. Sources said they still expect some strong fertilizer demand for soybeans in the region, particularly for potash. Fields were wet in much of the region last week, however, and temperatures were below seasonal averages.
The anhydrous ammonia market was quoted at $405-$425/st FOB Minnesota terminals, depending on location, with the low at Vernon Center and the upper end reflecting the dealer price FOB Pine Bend. North Dakota sources quoted delivered ammonia at $455-$460/st for limited tons to limited locations in the state, with some suppliers on allocation at mid-month.
Great Lakes: Wet weather slowed field activities in the region last week, but planting was well advanced thanks to favorable weather conditions in April. Dealers talked of excellent spring fertilizer volumes, and additional movement is expected for the sidedress run. One source said he expects UAN and ammonia sidedress volumes in his trade area to be down slightly from average due to the plentiful preplant run.
Ammonia was quoted in the $480-$490/st FOB range by Michigan dealers FOB Courtright, Ont. Wisconsin sources reported slightly lower numbers out of Illinois terminals on a spot basis.
UREA
U.S. Gulf: Urea barges were reported to be quiet last week, with most players calling the market in the low $270s/st. Sources said all the action is at terminals and not at NOLA, and they were hoping that once those terminals run out, NOLA would again see some interest.
Some buyers felt confident that if they gave a firm offer below $270/st FOB they would own it. And there were rumors of lower prices to come, with speculation about the pricing for recent Russian imports. The paper market fed into this, with sources noting that third-quarter paper trades for NOLA were down in the $240s/st FOB.
Prills were reportedly being unloaded in NOLA, and more were on the way.
Urea imports were up 28 percent, to 849,436 st from the year-ago 661,226 st, according to DOC. However, for July-March, they were still off 3 percent, to 4.56 million st from 4.68 million st.
Eastern Cornbelt: Granular urea pricing had reportedly dipped to $320-$340/st FOB most regional terminals to the dealer, although dealer reference prices out of some inland locations in Ohio remained as high as $360/st FOB.
Western Cornbelt: Granular urea continued to slide, with dealer pricing quoted in the $310-$330/st FOB range in the region, depending on location. Dealer pricing out of lower Mississippi River terminals had reportedly slipped to the $300-$305/st FOB range at mid-month.
Northern Plains: Sources said granular urea pricing out of the Twin Cities market had dropped to $300-$310/st FOB, with the upper end reflecting the more common quote to the dealer at mid-month. In North Dakota, sources pegged reference prices at the $360/st FOB level, with delivered urea quoted in the $370-$380/st range.
Great Lakes: Urea pricing was down from last report. The granular urea market was reported in the $330-$355/st range FOB regional terminals, with the low in Wisconsin and the upper end to the dealer FOB Michigan warehouses. Michigan contacts talked of tight urea inventories at many locations, with some touting dealer reference prices as high as $370/st FOB last week.
Northeast: Granular urea continued to be quoted in the $350-$355/st range FOB Philadelphia to the dealer. Out of terminals in Virginia, Georgia, and the Carolinas, urea pricing had reportedly fallen to $320-$330/st FOB.
Pakistan: Late last week TCP announced it would close a tender for 200,000 mt on June 5. The tender is for only half of what the government estimates it needs for the upcoming application season.
Just a month ago the agreed-to consensus was that TCP would only need to import an additional 200,000 mt during the summer. That changed after natural gas was diverted from urea production to electricity generation. The loss in urea production doubled the number of tons needed for import.
Industry sources are not surprised at the number of tons asked for in the tender. Pakistan rarely takes large quantities in one purchase.
Unlike its Indian counterparts, TCP does not engage in negotiations prior to or after a tender. It takes whatever quantity is offered at the lowest price. The company will then issue follow-up tenders until the original tonnage request is fulfilled.
Sources do not expect to see large initial offers in the tender. One source said that with the Indians ready to call a tender soon and a falling market, few seem willing to make large, long-term commitments for tonnage.
India: With the TCP tender now called, sources expect to see a tender call from India soon. Some traders are still holding to the idea that the call may come just as people begin arriving in Paris later this week for the annual IFA conference. Some say the call may come early this week. Others say the tender will be called after the conference.
The “after IFA” group argues that Indian reserves are strong enough to get the season started. They also say the delay in the monsoon season means demand for material will not come as early as usual.
If India can hold off until after the IFA conference, sources argue, the buyer will see competition among Black Sea, Middle East, and Chinese urea in a market that is already soft and growing softer.
In addition to the increased competition among urea sellers, the change in the Indian subsidy program means that the buyers do not have to import as much urea as before.
The new subsidy system is based on the nutrient content rather than a specific fertilizer. That means buyers could look to other nitrogen-based fertilizers. Sources point out that NPK or ammonium sulfate can be imported by the private sector and receive subsidy backing. This, observers say, could mean less urea imported and a more balanced input program for farmers.
Sri Lanka: The Ministry of Agriculture closed a tender May 7 that had area traders wondering about the direction of the market.
For example, the Toepfer “sight” offer of $355/mt CFR showed an estimated netback to the Arab Gulf of $300-$315/mt FOB. Even with subtracting $10/mt for the bagging, the price is more than $20/mt higher than where most see the market.
The other thing that surprised some traders is that while the agriculture ministry tender called for 60,000 mt, more than 400,000 mt was offered.
Overall, the offers all show a stronger market than many thought possible. The tally of the tender follows below.
The Chinese material, sources say, is most likely tons already sitting in bonded warehouses and ready for prompt shipping.
The ministry had not made a decision by the end of last week. Sources say the ministry might scrap the tender in the hopes of drawing lower prices.
Middle East: Sources say prices have not changed much. Despite the higher prices offered into Sri Lanka, sources say prills and granular have pretty much remained stable.
One source opined that one reason TCP/Pakistan called a tender for only 200,000 mt instead of the needed 400,000 mt is because the governments of Pakistan and Saudi Arabia may be in talks about another aid package that will include fertilizer deliveries. The two countries have agreed to several of these deals in the past. The current one will provide Pakistan with about 300,000 mt of urea from Sabic in the next couple of months.
Other contract deals by producers with the United States and Australia are keeping cargoes flowing.
Sources say increased demand for tons into South East Asia is being considered by suppliers. Unfortunately for the Middle East producers, there is just enough Chinese material being offered into that part of the world to offer serious competition.
Granular is seen at $260/mt FOB. One trader said a firm bid at $255/mt FOB would be snapped up. The problem, he added, is that finding a buyer at that price would be difficult.
Urea Tender |
||||||
| Company | Quantity MT | US$/mt FOB | US$/mt CFR Sight | US$/mt CFR 180 days | US$/mt CFR 270 days | Origin |
| Muscat Overseas | 25,000 | 365.00 | 391.00 | 409.00 | Ukraine | |
| Toepfer | 24,000 | 355.75 | 365.55 | 372.05 | Qatar | |
| Transammonia | 60,000 | 327.00 | Oman – China – CIS | |||
| Blue Dee Barge | 12,000 | 291.75 | 331.75 | 343.36 | 349.17 | Iran – Egypt – CIS – China |
| 12,000 | 300.00 | 340.00 | 351.90 | 357.85 | ||
| 12,000 | 305.00 | 345.00 | 357.08 | 363.11 | ||
| 24,000 | 310.00 | 350.00 | 362.25 | 368.38 | ||
| Ameropa | 36,000 | 337.65 | China – CIS – Indonesia | |||
| 12,000 | 342.05 | |||||
| 12,000 | 352.05 | |||||
| Bary Chemicals | 60,000 | 328.00 | China | |||
| Valency | 12,000 | 284.68 | 314.68 | 319.38 | China – Uzbekistan | |
| Midgulf | 24,000 | 348.50 | CIS – China | |||
| ETA* *CIF Delivered to Warehouse | 60,000 | 352.77 | 361.37 | 365.67 | Middle East – CIS – China | |
| Swiss Singapore | 24,000 | 329.43 | 333.20 | China – Middle East – Indonesia | ||
| 36,000 | 334.10 | 337.80 | Vietnam | |||
Urea in the area remains topsy-turvy compared to traditional patterns. Prills are seen as the more expensive version of urea at this time, with granular running about $10/mt cheaper.
Black Sea: While some tons are moving out, sources say large-scale sales out of the area are practically nonexistent. Demand for large cargoes is not strong enough to move the price up. At the same time, the purchases that are being made are for just enough to satisfy the buyers’ needs rather than any reserve building.
Prices remain in the low $230s/mt FOB. Even the TCP tender and the expected Indian purchases are not expected to be enough to seriously move the price.
China: Sources report ships are being booked to move material out of Chinese ports in mid- to-late June. The booking, said one trader, seems to be in anticipation of Chinese urea already in bonded warehouses finally getting sold. Some say the material may end up in Pakistan, while others say the vessel bookings are being done to anticipate prompt shipping under an Indian tender.
The urea ships are competing at the ports with vessels loading phosphates. That competition will increase after June 1, when the phosphate export duty drops to 7 percent.
For now, Chinese urea is pegged in the $260s/mt FOB.
The main markets for the Chinese product are fellow Asian buyers.
Sources say the ability to pick up cargoes of 5-15,000 mt is attractive to buyers in Thailand or the Philippines.
Producers continue to face the problem of weak domestic demand and pressure to continue to operate. Sources report many of the domestic warehouses are full. The only place to move the tons, they say, is to offshore markets.
One trader said that come July 1, when the export duty drops to 7 percent, many of the tons currently in domestic warehouses will be offered to international buyers.
The export season will be briefly interrupted in August and September, and then restart in October for the rest of the year. Producers hope to nail down plenty of end-year sales.
NITROGEN SOLUTIONS
U.S. Gulf: The market remained quiet, with sources still calling it $200-$205/st FOB ($6.25-$6.41/unit). Some players remember last year when prices dropped into the $120s/st FOB during the summer, and are a tad skittish about holding onto too many barges as the season ends. However, unlike last year, inland inventories are more likely to be empty, according to most.
March imports were up 57 percent, to 312,023 st from the year-ago 198,846 st, according to DOC. However, July March imports were off 6 percent, to 1.27 million st from 1.35 million st.
Eastern Cornbelt: UAN-32 was pegged at $7.50-$8.00/unit FOB in the region, with the low out of Illinois river terminals and the upper end out of inland locations in the region. One source quoted the Cincinnati market at the $7.85/unit FOB level to the dealer last week.
Western Cornbelt: UAN-32 was quoted in the $235-$255/st ($7.34-$7.97/unit) range FOB regional terminals, with the low out of spot river locations at mid-month. Those numbers reflected a slight drop from last report.
Northern Plains: The UAN market remained at $7.91-$8.21/unit FOB regional terminals, with the upper end quoted at $230/st for UAN-28 out of spot Minnesota terminal locations.
Great Lakes: The UAN market was pegged in a broad range in the region. In Michigan, UAN-28 was reported in the $230-$240/st ($8.21-$8.57/unit) FOB range to the dealer, while Wisconsin sources quoted UAN-32 at $250/st ($7.81/unit) FOB on the low end.
Northeast: UAN-30 was quoted at $205-$215/st ($6.83-$7.17/unit) FOB Baltimore and Philadelphia to the dealer, down slightly from last report. Sources talked of brisk solutions movement in recent weeks, and tight inventories. Some suppliers have reportedly moved in additional tons for the sidedress run in late May and June.
Out of terminals in upstate New York, the UAN-32 market was steady at $7.50-$7.75/unit FOB.
AMMONIUM NITRATE
U.S. Gulf: Barges were called $250-$255/st FOB and hard to find.
March imports were about level with year-ago levels, with the recent month at 59,985 st and the year-ago 59,807 st. However, July-March were off 28 percent, to 377,750 st from 522,017 st.
Western Cornbelt: Ammonium nitrate remained in the $305-$325/st FOB range in the region, where available, with the upper end reported in Iowa.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was steady
at $250-$260/st FOB or rail-DEL in the region.
Western Cornbelt: Granular ammonium sulfate was quoted in the $250-$260/st FOB range in the region, with tight supplies reported.
Northern Plains: Granular ammonium sulfate was tagged at $250/st FOB Minneapolis and $250/st DEL in North Dakota out of Beulah. Dealer reference pricing was quoted at $260/st FOB or DEL from some suppliers.
Great Lakes: Granular ammonium sulfate was quoted at $238-$260/st FOB, with the low in Michigan. The upper end was reported by Wisconsin sources for FOB or rail-delivered tons from Honeywell.
Northeast: Granular ammonium sulfate was reported in a broad range at $214-$240/st FOB, with the upper end in Philadelphia.
PHOSPHATES
Central Florida: As bad as it was, the Central Florida DAP market was leading the charge last week for the major North American wholesale markets. Producers were shipping some railcars and truckloads purchased on a prompt basis into the Southeast, but even that will likely dwindle this week.
The spring season has essentially ended and no fill programs were being offered, so dealers were allowing their bins to run empty and were willing to bet that prices will decline during the next month or two, when they will have to refill for the fall season.
Producers were not overly concerned, because they have a large book of export business they will need to fill. That will last until the domestic buyers are in the mood to return to the market for fall.
Most buyers believe that prices will decline during that time – and they may – but it did not appear the drop would be very significant. However, there was not much chance prices will suddenly escalate during the next couple of months, either, so doing nothing was probably a good idea.
The Central Florida DAP price range last week continued unchanged from the previous week at $410-$415/st FOB. Mosaic’s posted price was $415/st FOB, but national accounts could purchase product for about $5/st FOB less, while CF’s price was $410/st. MAP prices were uniformly $10/st FOB more than DAP. PCS Sales was charging market-based prices. The prices from Agrifos were $440/st FOB for DAP and $450/st FOB for MAP, but railcars were about $5/st FOB less, if available.
U.S. Gulf: Weather in the Midwest slowed field activity last week, but the season was coming to a close there and almost everywhere, except the Dakotas and western Canada, which should be starting soon. However, little of that business was supplied from the Gulf river market. The worst of the weather hit in Oklahoma and Kansas last week, where tornadoes killed three people and hospitalized more.
Warehouses accounted for most of the business last week, but terminals were running low on phosphate and very few had any plans to re-supply before they prepare for the fall season. Little activity was expected until June or July. Most would like to see a decrease in price, but that will probably be on a small scale, because the industry had large commitments in the export market, which will hold down inventories.
Warehouse prices were relatively unchanged from the week before, in the $445-$455/st FOB range.
Mosaic’s Faustina ammonia plant was up and running again last week, which will help the company with its supply situation, although it will not make much difference in NOLA DAP demand.
Last week China agreed to buy another six cargos of corn from the U.S., which will bring the total to eight vessels of 50,000 to 55,000 mt each. Although the amount was relatively small, it was considered to be significant, because China has made few purchases of corn from this country for several years. Meanwhile, the price of corn for December had moved very little as of late last week, still near $3.80/bushel.
Because crops went into the ground early this season, an early harvest was expected. Sources said the spring season was good and, if the corn price and harvest meet expectations, the fall season will follow suit.
By late last week the barges in position were essentially gone, and the only ones available were still to be loaded in New Orleans and were being offered at a lower price, $410/st FOB.
The NOLA DAP barge price range last week flattened from $417-$420/st FOB NOLA the previous week to $410/st FOB, with the disappearance of barges in position and the end of the spring season. Sources predict prices will likely remain at the low level for several weeks.
Eastern Cornbelt: DAP was tagged at $445-$460/st FOB regional warehouses, down slightly from last report, with the low out of spot river locations in Illinois and the upper end at inland shipping points in the region. MAP was $10/st higher than DAP. 10-34-0 remained at $340-$360/st FOB, with the low in Illinois.
Western Cornbelt: DAP was quoted at $445-$455/st FOB regional warehouses, with MAP $10/st higher. 10-34-0 remained at $335-$355/st FOB in the region, with the low in Nebraska and the high in Iowa.
Northern Plains: The DAP market was pegged at $445-$450/st FOB the Twin Cities, with MAP $10/st higher. The upper end of the MAP range was quoted at $475/st FOB North Dakota warehouses on a spot basis.
The 10-34-0 market remained at $340-$345/st FOB Minnesota terminals, with little demand reported now that the preplant run is finished. No current delivered prices were reported in the North Dakota market.
Great Lakes: DAP pricing covered a broad range at $445-$480/st FOB regional warehouses, with the upper end out of Michigan warehouses and the low reported by southern Wisconsin sources out of spot river locations. MAP was $10/st higher than DAP.
The 10-34-0 market was pegged at $350-$360/st FOB regional shipping points, down slightly from last report.
Northeast: The MAP market was pegged at $465-$475/st FOB regional warehouses, with DAP priced $10/st less, where available. The low end of the MAP range was quoted out of warehouse locations in western Pennsylvania. 10-34-0 was tagged at $355-$360/st FOB in upstate New York, and $370-$375/st DEL in southern Pennsylvania.
U.S. Export: Although no new export deals were found last week, it will be the export market that carries the phosphate industry for the next couple of months. PhosChem, as well as other sellers from North America, has a huge book of business with India, and India was pushing for deliveries to be made as fast as possible. In the case of PhosChem, the contract has a plus-minus clause, and India wants the plus so that deliveries will almost assuredly exceed the 2 million mt called for in the agreement. Brazil was expected to enter the market sometime soon, which will also help keep inventories down for the summer.
Due to a lack of new transactions last week, the export DAP price range was unchanged at $472-$473/mt FOB.
Sri Lanka: The Ministry of Agriculture closed a TSP tender May 7. The dominance of Chinese product underscored for some observers how many tons China has available for export once the lower export tariffs kick in June 1 (see next page).
A final decision on which company will get the award is expected soon.
India: Sources report Indian buyers have been talking about additional purchases that indicate they are willing to spend a few extra dollars per ton to ensure a steady supply of DAP and TSP.
The increase in the Indian costs appears to be coming in freight rather than the price paid to producers. Freight rates appear to be going up as more vessel owners get inquiries about moving more phosphates out of China to India after June 1.
TSP Tender |
||||||
| Company | Quantity MT | US$/mt FOB | US$/mt CFR Sight | US$/mt CFR 180 days | US$/mt CFR 270 days | |
| Valency | 24,000 | 347.48 | 377.48 | 382.14 | China | |
| 12,000 | 356.98 | 386.98 | 391.71 | China | ||
| Blue Dee Barge | 12,000 | 397.25 | 452.25 | 468.08 | 475.99 | China |
| 12,000 | 390.00 | 445.00 | 460.58 | 468.36 | ||
| 12,000 | 410.00 | 465.00 | 481.28 | 489.41 | ||
| Ameropa | 12,000 | 379.16 | China | |||
| 12,000 | 389.16 | |||||
| Midgulf | 24,000 | 374.80 | China – Egypt | |||
| ETA* *CIF Delivered to Warehouse | 36,000 | 402.97 | 410.57 | 415.87 | China | |
| Swiss Singapore | 36,000 | 392.42 | 394.41 | China – Egypt – Tunisia | ||
POTASH
Eastern Cornbelt: Potash was generally reported in the $395-$405/st range FOB regional warehouses, depending on grade and location, with the upper end also quoted by Illinois sources for rail-delivered potash tons at mid-month.
Western Cornbelt: Potash was pegged at $395-$410/st FOB regional warehouses, depending on location.
Northern Plains: Potash remained at $367-$380/st FOB Saskatchewan mines, depending on grade and supplier. Delivered potash was quoted at $410-$425/st in the Dakotas. Out of regional warehouses, potash was quoted at $390-$410/st FOB, with the low out of the Twin Cities market.
Great Lakes: Potash was pegged at $405-$417/st FOB, with the upper end quoted by Michigan sources for white granular tons.
Northeast: The potash market was tagged at $402-$410/st FOB and $425-$430/st rail-DEL in the Northeast region, depending on grade and location. The low end of the FOB range was once again reported out of warehouse locations in western Pennsylvania.
U.S. Imports: Potash imports soared 215 percent in March, to 1.17 million st from the year-ago 371,637 st. The surge caught imports up for the year. July-March imports are now up 2 percent, to 6.2 million st from the year-ago 6.1 million st.
Sri Lanka: The Ministry of Agriculture closed a tender for MOP May 7. Results in the tender follow below.
| Potash Tender | |||||
| Company | Quantity MT | US$/mt CFR Sight | US$/mt CFR 180 days | US$/mt CFR 270 days | Origin |
| Toepfer | 36,000 | 440.20 | 451.25 | 459.80 | CIS |
| Dragon Asia | 12,000 | 450.00 | 457.75 | CIS | |
| 24,000 | 449.65 | 457.55 | CIS (In 1-2 lots) | ||
| 36,000 | 449.20 | 457.15 | CIS (In 2-3 lots) | ||
| Midgulf | 12,000 | 520.00 | Jordan | ||
| ETA In 3 lots/CIF to warehouse | 36,000 | 517.07 | 522.41 | 528.97 | CIS/Middle East |
| Swiss Singapore | 36,000 | 533.00 |
SULFUR
Tampa: The impact on sulfur of the multi-million-barrel BP oil well leak in the Gulf of Mexico was still hard to determine last week. Sources said some refineries along the Gulf were planning on reducing processing, because vessels carrying crude oil to them were fearful that they might experience long delays. As of late last week efforts to stop the leak had been unsuccessful, and the doubt will make planning difficult for all concerned.
Refineries were running around 85 percent last week, which was down slightly from the previous week. Overall, supply and demand was close to being in balance.
Predictions were that this year would be the most active hurricane season in several years. El Nino, which had cooled temperatures in the Atlantic and Gulf, had thwarted the strong storms in recent hurricane seasons, and its absence was ominous. A large storm could threaten phosphate production in Florida, oil refineries on the Gulf coast, and sulfur transportation.
Koch was said to have finished building its sulfur formation unit at Corpus Christi, although it was not clear whether full-scale production had begun.
U.S. Imports: Imports jumped 231 percent in March, to 163,678 st from the year-ago 49,495 st. However, they are still off 21 percent for the year. The July-March period was 1.02 million st, versus the year-ago 1.29 million st.
Vancouver: With prices around $130/mt FOB, not much was likely to change in the Vancouver market, unless China makes a decisive move and starts large-scale buying again. Brazil was said to be less active in recent weeks.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 57.43 | 56.44 | 44.67 |
| CF Industries | CF | 72.24 | 74.16 | 77.13 |
| Intrepid Potash | IPI | 27.27 | 25.61 | 25.84 |
| Mosaic | MOS | 48.03 | 47.66 | 46.34 |
| PotashCorp | POT | 102.41 | 100.37 | 102.63 |
| Terra Nitrogen | TNH | 79.37 | 77.05 | 117.99 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 35.77 | 35.32 | 19.79 |
| Deere & Co. | DE | 59.88 | 56.39 | 41.06 |
| Scotts | SMG | 46.88 | 46.12 | 33.83 |
SPOT BARGE PRICES
Fertilizer found in Times Square car bomb
Fertilizer security once again moved into the spotlight last week when New York law enforcement officials on May 1 discovered 100 pounds of bagged fertilizer ?Çô along with gasoline, propane, firecrackers, and alarm clocks ?Çô in a bomb-rigged SUV parked in Times Square.
The crudely made bomb was safely defused, and a Pakistan-born U.S. citizen, Faisal Shahzad, was arrested on May 3 at Kennedy Airport after boarding a plane that was scheduled to fly to Dubai. Authorities tracked down Shahzad using the vehicle identification number on the Nissan Pathfinder that was left unattended ?Çô with the engine running and hazard lights flashing ?Çô in the crowded Times Square entertainment and shopping district on Saturday evening. The IP address of the computer Shahzad used to contact the seller of the Nissan Pathfinder was also critical information in tracking him down, authorities said.
Eight bags of fertilizer were found in a metal gun locker located in the Pathfinder’s rear cargo area. New York Police Detective Cheryl Crispin told Green Markets that an analysis of the fertilizer was incomplete and the investigation ongoing, but an NYPD spokesman at a news conference early in the week said the material was not “explosive grade” and would not have produced “the kind of devastation associated with ammonium nitrate bombs.” The spokesman said the fertilizer was purchased at a grocery store. Newsweek magazine referred to it as “several bags of garden-variety fertilizer,” and Fox News referred to it as “sugar nitrate fertilizer.” The Fertilizer Institute said sugar nitrate is actually potassium nitrate.
Along with the fertilizer, investigators found two full five-gallon gasoline containers, three 20-pound propane tanks, a 16-ounce can packed with 20-30 M-88 firecrackers, and two alarm clocks that were wired to one or more of the other items. CNN reported that authorities also found 15 bags of fertilizer and flash powder at a Connecticut home where Shahzad had once lived.
Shahzad, who became a naturalized U.S. citizen just one year ago, was formally charged on five counts in a federal court in Manhattan on May 4, including trying to explode a weapon of mass destruction. He reportedly confessed to rigging the car bomb and admitted to receiving bomb-making training in Pakistan’s Waziristan region. Shahzad was reportedly cooperating with authorities, and initial reports said he had told investigators that he acted alone.
On May 6, however, the New York Times reported that intense questioning of Shahzad had led officials to believe the Pakistan Taliban had helped inspire and train him, and that investigators were questioning members of the banned militant group Jaish-e-Muhammad in Islamabad. News reports early in the week said intelligence officials in Pakistan had detained five suspects in the southern city of Karachi in connection with the case.
According to Fox News, the Times Square car bomb was planted two days after the U.S. military’s Central Command had issued a 13-page classified intelligence report, Fertilizer Production in Pakistan and IED Implications, warning that fertilizer bombs are being manufactured by the Taliban and insurgents in Pakistan and are increasingly used to fight NATO forces.
“Beyond domestic instances of fertilizer-based HME (homemade explosives), militants in Afghanistan and Pakistan are increasingly using fertilizer as the main charge in their IEDs,” the report was quoted as saying. “Ammonium nitrate-based fertilizers, including calcium ammonium nitrate, produce effects similar to dynamite, and the mixture of urea and nitric acid produces explosives similar to nitroglycerine.”
Mathers noted that investigators determined quickly that the fertilizer was not ammonium nitrate. She cautioned as well that “fertilizer by itself is not explosive anyway.” In reference to the classified report cit
TFI quickly responds to fertilizers’ inclusion in study from President Obama’s Cancer Panel
The Fertilizer Institute (TFI) quickly responded last week to the inclusion of fertilizers in a May 6 report by President Barack Obama’s Cancer Panel. The report is titled Reducing Environmental Cancer Risk, What We Can Do Now.
“The Fertilizer Institute is unaware of any scientific information that warrants fertilizers’ mention in this report, when in fact the nutrients found in fertilizers are required by all living organisms,” it said in a statement. “Further, the references to fertilizer in the report released today are contrary to the available body of literature which demonstrates that fertilizers have a positive effect on human health by enhancing the nutritional quality of fruits and vegetables.
“Finally, all major fertilizer products have been proven safe after rigorous human health and ecological toxicity testing,” said TFI. “The results of these tests were successfully submitted by the U.S. Environmental Protection Agency into an international database of chemicals managed by the Organization for Economic Cooperation and Development.”
The 240-page report has a seven-page section entitled “Exposure to Contaminants from Agricultural Sources.” Of the fertilizers, the section hones in on nitrogen and phosphates.
The report says nitrogen may increase cancer risk due to the breakdown of nitrogen by digestive enzymes. Nitrogen would be introduced to humans by way of nitrate that gets into the water system, with groundwater in rural areas being a concern as it would have a greater likelihood of elevated nitrate levels, according to the report. However, the report noted that almost all public water supplies have nitrate levels below the Environmental Protection Agency’s Maximum Contaminant Level (MCL) of 10 mg/L.
While the report cited a study of older women in Iowa that found that those whose drinking water had higher long-term average nitrate levels had an increased risk of bladder and ovarian cancer, it noted that other studies have had mixed results or shown no association with nitrate intake. It said limited mechanistic studies do suggest that nitrate levels below the MCL could be carcinogenic. The report said that further research is warranted, particularly because nitrate levels continue to rise in groundwater as use of nitrogen fertilizer increases. It said with greater production of corn for fuel, nitrate levels in drinking water are likely to continue their upward trend.
The report said phosphate fertilizers are often contaminated with cadmium and are responsible for significant cadmium soil and water contamination. It said fertilized soils have been found to have two-to-six times the cadmium concentration of nearby unfertilized land.
In the food supply, it said cadmium is most highly concentrated in grains and seafood, and residents of southern Louisiana have had pancreatic cancer rates marketedly higher than the national average. It said research has demonstrated an association of rural residence, dietary factors (high consumption of rice, seafood, and pork), and cigarette smoking with higher pancreatic cancer risk, particularly among those with Cajun/Acadian ancestry. It said rice fields in the area are treated with cadmium-containing phosphate fertilizers, which is taken up into the rice, the predominant starch in the Cajun diet. The fields are flooded after the rice harvest, and crawfish, a Cajun staple, are farmed in the previously fertilized fields. The report said urinary cadmium excretion levels in studied Louisiana pancreatic cancer patients have been found to be more than four-fold higher than control subjects.
In addition, the report says phosphate accelerates the leaching for arsenic from the soil into groundwater. It also says phosphate in the soil has been found to increase arsenic accumulation in wheat.
The full study by the President’s Cancer Panel can be found online at http://pcp.cancer.gov.
CF earnings off in 1Q
CF Industries Holdings Inc. on May 7 reported net earnings for the first quarter ending March 31, 2010, of $6.2 million ($.09 per diluted share) on sales of $502.4 million, compared to the year-ago $83 million ($1.28 per diluted share) on sales of $680.6 million. However, the company did report a net loss attributable to shareholders of $4.4 million, versus the year-ago $62.7 million. CF reported preliminary sales figures in April (GM April 19, p.1), but not for earnings.
“The first quarter is an important period for our customers to stock up for the spring application season. Lighter than normal stocking activity this year sets us up for tight conditions in the second quarter, which favor a producer with the storage capacity to enable it to capitalize on demand when it arises in the field,” said Stephen Wilson, CF chairman and CEO. “Ideal planting conditions for ammonia application arrived in April, and we were ready to take advantage of it.”
Nitrogen gross margins were $97.3 million on sales of $327 million, down from the year-ago $169.4 million and $456.2 million. Nitrogen volumes were 5 percent lower than year ago, reflecting lower urea application due to wet conditions in Texas and Oklahoma. CF exported 53,000 tons of ammonia and UAN during the first quarter to Australia, Chile, and Mexico. The ammonia exports were the company’s first in recent history.
Average selling prices for nitrogen products were down from the year-ago quarter, but were significantly higher than fourth-quarter 2009 prices. First-quarter 2009 prices were favorably impacted by forward sales booked during 2008. For ammonia, the average selling price was $321/st, down from the year-ago $527/st, but up from $308/st in the 2009 fourth quarter. For urea, the average selling price was $306/st, down from $365/st in the year-earlier quarter, but up from $272/st in the 2009 fourth quarter. For UAN the average selling price was $205/st, down from $298/st in the first quarter of 2009, but up from $156 in the 2009 fourth quarter.
Nitrogen sales under the company’s Forward Pricing Program (FPP) totaled 400,000 st during the quarter, representing 33 percent of nitrogen sales volumes. In the 2009 first quarter, FPP sales of 533,000 tons accounted for 42 percent of segment sales.
Phosphate gross margins were $31.7 million on sales of $175.4 million, up from a year-ago loss of $7.1 million on sales of $224.4 million. Phosphate volumes fell 9 percent due to lower exports, offset partially by higher domestic sales volume.
Phosphate sales volumes were 480,000/st, with volume for DAP down 16 percent and for MAP up 29 percent compared to the year-earlier quarter. Domestic phosphate sales volumes increased by 14 percent from relatively low levels last year. Export sales volume of 91,000/st was 51 percent lower than the same period last year as the company focused this year on domestic markets, where phosphate fertilizer traded at a premium to international markets.
Average selling prices for phosphate products were lower than in the 2009 first quarter, but significantly higher than in the 2009 fourth quarter. For DAP, the average price was $361/st, compared to $418/st in the 2009 first quarter and $277/st in the 2009 fourth quarter. For MAP, the average selling price was $379/st, compared to $466/st in the 2009 first quarter and $309/st in the 2009 fourth quarter. Prices weakened in March, when competitors reached sales agreements with India at prices significantly below the then prevailing market, but found a floor at that level and started to rebound.
Phosphate sales under the company’s FPP totaled approximately 258,000 st during the 2010 first quarter, representing 54 percent of segment volume, up from 138,000 st sold or 26 percent of segment volume in the 2009 first quarter.
CF believes that the combination of high corn acreage, improved application rates, warm spring weather, low channel inventory, and low import volume leads to a robust outlook for Midwest demand for nitrogen and phosphate fertilizers. Export demand for phosphate is expected to remain relatively strong through the quarter due to sizable shipping requirements to India and additional demand from Latin American and Asia, continuing the relatively tight international trade balance.
“Conditions are in place for an exceptionally strong spring season,” indicated Wilson. “A drying trend in the Midwestern U.S. allowed us to drain most of our available ammonia storage throughout the region, and we’re working hard to resupply as the season continues. Our extensive ammonia distribution network is set up to take full advantage of opportunities such as the one we saw in April. For the other products, we continue to believe that tight conditions will persist through the second quarter.”
Excluding the operations of Terra, the company delivered more ammonia in April than in any other month since becoming a public company, and approximately 170 percent of the previous five-year average for April. Ammonia shipments for the legacy Terra operations also were greater than for any other month over that time.
As of March 31, 2010, FPP bookings for the remainder of 2010 stood at 1.1 million tons, compared to 1.2 million tons at a similar point in 2009.
Forward prices for natural gas are now lower than the company’s previous forecast. Second-quarter 2010 sulfur costs for phosphate products are expected to be higher than the first quarter, but with downward pressure through the peak oil refining season.
The Andersons reports record 1Q net income; fertilizer volumes up 10 percent
The Andersons Inc. reported record first-quarter net income of $12.6 million ($.66 per diluted share) on sales of $722 million, compared to the year-ago income of $3.9 million ($.27 per diluted share) on sales of $697.4 million.
The record quarter was driven by the Grain & Ethanol Group, which reported operating income of $20.7 million, up from the year-ago $5.7 million. Sales moved up to $521 million from the year-ago $481 million.
“We are pleased to be able to report record earnings,” said CEO Mike Anderson. “The Grain & Ethanol Group led our results with strong performance in all three areas – grain, ethanol, and the Lansing Trade Group investment. As I review these results, I am again reminded that our strategy of purposeful diversification allows us to remain a strong and profitable company even when one or more of our business units is continuing to feel the after effect of last year’s recession.”
The Plant Nutrient Group had first-quarter operating income of $700,000 on revenues of $103 million, versus the year-ago income of $2 million on revenues of $112 million. While revenues decreased due to lower average selling prices, tons sold were up almost 10 percent. The company said early 2009 margins were favorably impacted by high margins on deferred sales and prepay contracts from 2008. Margins have now returned to more normal levels and are meeting company expectations.
Anderson told analysts that the Plant Nutrient Group has now been profitable in the first quarter for four years, in what was previously a lost quarter. He said for the year, volumes may be up in the vicinity of 20 percent of 2009.
“On the farm center business, first quarter is always weak, and although the weather has been ideal in February it wasn’t all that great in the north here in the first part of the year,” said Anderson. “And in the south … we had the problem with the Florida freeze, so that had a little negative impact, but we’re getting back on track there. So we’re just really excited about where we’re sitting at the present time with our agricultural fertilizer business.”
Anderson said the Turf & Specialty Group continues to perform well as it strives to achieve another record year.
The Rail Group saw a slight increase in income, to $1 million on sales of $27 million, compared to the year-ago $900,000 and $27 million.
The Turf and Specialty Group saw a slight decrease in income, to $2.7 million on sales of $42 million from the year-ago $3.1 million and $45 million. The Retail Group had an operating loss of $2.8 million on sales of $30 million, versus the year-ago loss of $2.7 million on sales of $31 million.
In other news, on April 30 the company finalized the acquisition of the assets of O’Malley Grain Inc.’s two grain cleaning and storage facilities in Mansfield, Ill., and Fairmont, Neb.
In addition, the company reports that Risk Metrics Group of ISS Proxy Advisory Services, an independent proxy advisory service, has issued its proxy analysis and vote recommendation “for” the company’s proxy proposals to re-elect the board of directors, to approve the auditor, and to increase its authorized shares of common stock. The request proposes increasing the number of authorized shares of common stock, no par value, by 17 million shares – from 25 million to 42 million shares – during the company’s annual meeting of shareholders on May 7, 2010. The company’s current 1 million shares of authorized preferred stock, no par value, would be unchanged. At this time the company has no plans to issue the additional common shares.
“While we have no current plans to issue any additional shares, we believe the proposed increase in the number of shares available for issuance will allow the company additional flexibility,” said Nick Conrad, The Andersons’ vice president, finance & treasurer.