Toronto-Amazon Mining Holding Plc (AMH) says it has entered into an agreement with Sekita Agronegocios, a leading Brazilian agribusiness company, to fund agronomic tests using Amazon Mining’s proposed ThermoPotash product derived from the Cerrado Verde project. AMH says Cerrado Verde is a source of potash-rich rock, from which it plans to produce a slow-release, non-chloride, multi-nutrient, fertilizer product. Cerrado Verde, which is amenable to open pit mining, is located in central Minas Gerais in the heart of Brazil’s vast Cerrado agricultural area. Sekita plans to test ThermoPotash in real-world conditions for use with garlic, carrots, corn, soybeans, wheat, and grazing grass for dairy cattle. Sekita is a leading Brazilian carrot, garlic, and milk producer. Its farms are located less than 10km from the Cerrado Verde Project.
All posts by traceybg@gmail.com
Management Briefs
Todd Smith will be joining Wilbur-Ellis Co. in May to take the position of Southwest region fertilizer director, reporting to Gene Gauss, Wilbur-Ellis vice president, fertilizer and nutrition. Smith will manage fertilizer purchasing and procurement for the Southwest business units of Wilbur-Ellis and will remain in the Austin area. He is leaving The Mosaic Co., where he has overseen marketing and sales for Texas.
Market Watch
AMMONIA
U.S. Gulf/Tampa: Tampa anhydrous ammonia business has been reported at the $415/mt CFR mark for April, with Yara reportedly concluding this price with large buyers. The price is down $35/mt from the March $450/mt CFR.
Phosphate production is reportedly less than expected. In addition, sources said some sellers prefer to sell now rather than risk their product on the Midwest spring season. Sellers are also fearful of production returning in Ukraine.
Still, some sellers thought the drop was too much, and that others are too panicked about the spring season, saying it is way too early to throw in the towel on the spring season for ammonia. Another, however, said farmers in the Midwest are anxious and they want to plant corn the minute they can, and if that means foregoing ammonia in favor of another nitrogen, they will.
In the meantime, there was a lot of talk last week about a 20,000 mt export sale by CF of ammonia out of Donaldsonville. However, sources told Green Markets that while the deal did occur, it was really a swap with a trader in exchange for product at Tampa.
There was no word on new NOLA barge prices last week; however, sources said the new Tampa numbers would certainly put pressure on any new NOLA business.
Eastern Cornbelt: Field conditions in most of the region remained too wet for fieldwork in late March, but there were reports of a little preplant ammonia trickling to the field in southern Illinois earlier in the week. Spot ammonia pricing remained in the $415-$425/st FOB range out of regional terminals, with the higher numbers reported in the Indiana and Ohio markets. One Illinois source put the common dealer price at the $420/st FOB level for spot tons last week.
“We need to get 10 days of good running,” said one source, noting that early April is the favored time for preplant ammonia. “Everyone will try like hell to get rid of their prepay.”
Western Cornbelt: Anhydrous ammonia was quoted at $390-$410/st FOB regional terminals. One Iowa source put the dealer market at $390/st FOB Ft. Dodge and $400/st FOB Garner, with retail prices hovering in the $495-$510/st range to the grower.
California: Sources report some preplant fertilizer movement on rice, corn, cotton, summer vegetables, and dry bean fields. Preplant herbicide treatments were going down on vegetables crops in some locations. Sources reported only slight changes to the spot fertilizer markets.
Calamco adjusted its anhydrous ammonia price on March 25, dropping from $560/st to $520/st truck-DEL. The aqua ammonia postings moved on that date from $152/st down to $142/st FOB. Sources said ammonia movement on rice should kick off in early April, with big acreage planned north of Sacramento.
Agrium’s ammonia postings dropped as well, moving on March 25 to $520/st truck-DEL in central California and $525/st truck-DEL in northern California.
Pacific Northwest: Sources in Washington said growers continued to plant potatoes and early peas, and preplant applications were rolling briskly on a range of crops, including corn ground. The anhydrous ammonia market was quoted at $410-$420/st truck-DEL in the region, reflecting a drop from last report.
Western Canada: Much of the region enjoyed a taste of spring in late March, with warming temperatures and dry weather. Those conditions gave growers the spring bug, but there wasn’t a lot of field activity underway in the region. One Saskatchewan source said things could be rolling very soon, and he predicted that spring planting could be underway there before it begins in parts of the soggy Midwest this year.
Anhydrous ammonia pricing was steady at $700-$745/mt DEL in the region, with the lower numbers in Manitoba and Saskatchewan.
Black Sea: The full situation between Ukraine and Russia over natural gas supplies and prices is still up in the air. The prime ministers of the two countries met last week to hammer out a deal that would provide Ukraine with cheaper natural gas and end disputes over the transportation of natural gas into and through Ukraine.
Accusations by Russia that Ukraine was siphoning off gas meant for Western and Central Europe in recent years led the Russian gas monopoly to shut off the gas flow in the middle of winter. The disruption of gas flow affected the rest of Europe as well as Ukraine, prompting the European Union to step in and moderate the dispute.
In the end, Russia turned on the tap – but only after raising the price of natural gas to Ukraine.
The increase in price – about $300/1,000 cubic meters – made it impossible for the Ukrainian ammonia plants to keep operating.
Last year at this time ammonia out of Yuzhnyy was pegged at $215-$220/mt FOB. This year opened at $275-$280/mt FOB. These low prices meant the producers were not able to run without incurring massive losses.
The almost-one-year shutdown of the Ukrainian producers meant there were limited quantities of ammonia from the Black Sea area. Buyers took what Russian cargoes they could, as well as tons from Trinidad and the Middle East.
Last week the price was at $375-$380/mt FOB, a level that would allow the Ukrainian producers to open again. Sources report at least one major facility came back online, with others set to follow suit.
The recent drop in price at Tampa from $450/mt CFR to $415/mt CFR was a result of the increased tonnage expected from the Black Sea, said one source.
Working back from the Tampa price, one Asian trader said the price in the Black Sea could be pegged at $345-$360/mt FOB. He pointed out, however, that if the Ukrainian and Russian governments can come to an agreement on lower gas prices, the Yuzhnyy equivalent price in the low-$350s/mt FOB would be more than enough for the plants to keep running.
The deal under discussion between Russia and Ukraine is for Gazprom to buy into the Ukrainian pipeline system. Ukrainian law would have to be changed to allow for foreign ownership of any portion of the natural gas pipeline. The system accounts for about 80 percent of the flow of natural gas from Russia to the rest of Europe. It is also the second largest network on the continent.
There is precedent for Russia cutting a deal with a neighbor in exchange for a portion of the transportation network. Gazprom owns shares of the national pipeline systems in Belarus and Armenia. In exchange, Belarus, for example, pays $168/1,000 cubic meters instead of the more than $300 paid by Ukraine.
The Ukrainians are under pressure to do something. Russia is already backing an alternative route for natural gas that will bypass Ukraine. The new pipeline is expensive, but Russia and Gazprom seem committed to the idea to be clear of problems with Ukraine.
A deal that allows for Russian participation in the Ukrainian system would save Gazprom a great deal of money and increase its control over its product from wellhead to consumer.
The deal would also provide the cash necessary to upgrade the Ukrainian network. The country has been feeling heat from the East and West to modernize their facilities. Unfortunately, the cash-strapped country has had to put off not only upgrades, but regular maintenance.
Middle East: Producers have been arguing for weeks that the market should be at $400/mt FOB. But each time a producer thought a deal at that level was possible, Iran would settle a deal at significantly lower levels.
Sources now report that Iranian producers are asking $400/mt FOB. So far, no one has nibbled at the new price.
In the past several weeks a number of cargoes have been committed and loaded out of Iran. The most recent by Yara is slated for Northwest Europe, say sources.
Generally, material from Iran is sold at a slight discount to the Arab ammonia because of the extra steaming time to get to the Iranian port. A $400/mt FOB Iranian deal would translate to a $390/mt FOB deal elsewhere in the Arab Gulf.
If Iran gets $400/mt FOB, Asian sources say that would be a move in the right direction as far as the Arab producers are concerned, but still not enough.
The softened price in Tampa is no incentive for buyers to accept higher prices right now, said one observer.
Asia: Sources report Mitsui is having some problems getting its KPA facility in Indonesia back up and running.
The plant was on a routine turnaround and was expected to be back in production late last week. There now appear to be a few glitches in the start-up process that will keep the plant down until at least this week.
An extended shutdown could mean Mitsui might enter the market to buy tons for its clients. Sources report that Mitsui had a number of swap deals in place to handle the turnaround. Now, with the plant down longer than expected, new swaps might be difficult as other producers need to satisfy their own buyers. Some of them had counted on KPA tons as early as early April.
UREA
U.S. Gulf: Wet weather across much of the nation kept a damper on urea barges, leading to some slippage in price last week, according to sources. New trades, while few, were put within the $310-$314/st FOB range for granular. Sellers remain optimistic that prices will rebound once conditions start to dry out and field work begins in earnest.
Eastern Cornbelt: The granular urea market was steady at $350-$365/st FOB in the region.
Western Cornbelt: Granular urea was pegged at $345-$360/st FOB in the region, with the low again confirmed in southern Missouri to the dealer. An Iowa source quoted the market at $362/st DEL from Mississippi River shipping points, backing up to roughly $350/st FOB river terminals.
California: Granular urea pricing was unchanged at $375-$395/st FOB and $400-$420/st DEL in the state.
Pacific Northwest: Granular urea was steady at $395-$410/st DEL in the region.
Western Canada: Granular urea remained at $491-$516/mt DEL in the region, depending on location, with dealer reference levels quoted as high as $525/mt DEL in some locations.
Pakistan: The TCP tender for 125,000 mt closed March 25, with 830,000 mt offered.
The lowest offer from Mekatrade at $311.39/mt CFR with Iranian tons will most likely be accepted, and a new tender for the remaining 75,000 mt issued immediately.
Traditionally, TCP does not negotiate with runners-up in their tenders. But some in the industry thought that with only a 10 cent difference, TCP might approach Multicommerce to lower its price.
As the Thursday business day closed in Pakistan, the word from TCP was that it was ready to accept only the Mekatrade deal.
The tabulation of tender offers follows.
| Offering Company | Tons offered (mt) | Origin | US$/mt CFR |
| Mekatrade | 50,000 | Iran | 311.39 |
| Multicommerce | 50-75,000 | Open | 311.49 |
| Blue Deebaj Chemical | 50,000 | Iran-CIS-Egypt-China | 312.00 |
| Swiss, Singapore | 50,000 | Open | 312.50 |
| Transfert | 50,000 Firm | Open | 318.50 |
| 50,000 Optional | Open | 318.50 | |
| Transammonia AG | 50,000 | Open | 318.77 |
| Transammonia Trading | 50,000 | Open | 318.77 |
| Helm | 50-70,000 | Open | 319.45 |
| Gavilon Fertilizer | 50,000 | Open | 319.74 |
| Liven Agrichem | 50,000 | China-Middle East | 319.80 |
| Quantum | 50,000 | Open | 326.65 |
| Dreymoor | 50-70,000 | Open | 338.75 |
| Keytrade | 50-70,000 | Open | 335.00 Gwadar |
| 340.00 (Karachi-Gwadar) |
The two offers from Transammonia, say Asian sources, appear to have come from different regional offices of the company.
Sources peg the freight from Iran to Pakistan at $35/mt. That would put the netback to Iran at $276/mt FOB.
The absence of Arab urea producers was not surprising to industry observers.
Pakistan needs to import about 400,000 mt for the upcoming application season. A government-to-government aid package between Saudi Arabia and Pakistan will provide the tons not covered by the tender. Obviously, Sabic will supply the urea under the aid package terms.
Sources said there was no reason for any of the other producers to compete in the tender.
Besides, said one trader, they are saving themselves for the upcoming Indian tender.
India: Industry observers had expected Indian buyers to
hold off at least one more week before calling a tender.
One source said the dramatic drop in price as demonstrated in the TCP/Pakistan tender should have led the Indian buyers to sit still at least another week while downward pressure on prices continues.
The Indians confounded that conventional wisdom. IPL called a tender almost as soon as the TCP results were released.
The tender will close April 1 and is for an indeterminate amount. However, sources in India said IPL may buy up to 500,000 mt, subject to price and shipping criteria.
Sources expect to see the Middle East suppliers be aggressive in their pricing. Some have said the producers will try to reverse the loss exhibited in the TCP tender and move prices back up. Others have said some of the producers are getting to the point where they have to sell.
As with previous Indian tenders, the type of urea to be shipped – prilled or granular – is left up to the offering firm. Offers are to be on a delivered basis, but the Middle East suppliers usually offer their tons with FOB pricing. The Indians then use their own vessels to ship.
Indian buyers spent much of March talking to traders and producers hoping to nail down some long-term contracts for urea – much as they did for phosphates. Sources report the buyers undertook this effort to avoid tenders and the spikes in prices that normally follow.
Because the TCP tender came in at $311/mt FOB, sources say the target price set by the Indians of $300-$310/mt FOB is possible. One trader said IPL might even see sub-$300/mt CFR offers.
Indonesia: Pusri announced a selling tender of 20,000 mt to close March 30. Sources report the tender is being run under the first of new export permits.
The drought in Indonesia has depressed local demand, making exports more attractive.
The tender is for sale in four 5,000 mt lots because the shallow draught at the plant’s dock limits the size of vessels allowed.
Middle East: Producers were not happy with the results of the Pakistan tender. Sources estimate the netback on the Iranian tons at $275-$285/mt FOB.
The Arab producers were hoping to hold the line on prices as the Indian tender approached. Steady – albeit limited – orders kept the order books full enough to avoid panic. Saudi Arabia is in good shape, say sources, because it has a contract to sell about 300,000 mt to Pakistan under a government aid package.
The Saudi business is in addition to the cargoes sent to Australia by other area producers at a healthy netback.
With the U.S. market slowing, however, and medium-tosmall buyers now on the sidelines, sources say the reserves are building.
In the absence of any other public business in the region besides the TCP tender, sources say the market for prills and granular is in the upper $280s/mt FOB to mid-$290s/mt FOB. One Asian trader said $295/mt FOB for a spot cargo is possible.
Black Sea: Terms such as “dead” and “silent” kept popping up as traders talked about what was happening in Yuzhnyy.
Sources report bids to South American buyers are showing effective netbacks of $255/mt FOB. Producers are rejecting this price level.
Sources say a $30 gap now exists between producers and end users. And many traders are caught in between.
Even as no business takes place, one Asian trader said that buyers smell blood in the water. They seem to be willing to hold off until prices are more to their liking.
Even the IPL Indian tender did little to raise expectations of higher prices in the area.
The absence of any new business in the area has left industry observers saying the Indian tender shows a new price that is lower than the current market.
China: The Chinese tons offered in the TCP tender are apparently sitting in bonded warehouses looking for a home. And there are even more tons still looking for a buyer.
The Chinese domestic market appears to be dropping, as does the international market – and this poses a problem for the holders of the bonded material.
The price of urea when it went into the warehouses is higher than what the market can now handle. Sources say any trader working with the tons will have to take the loss rather than have the price reduction pass back to the producers.
NITROGEN SOLUTIONS
U.S. Gulf: While some said there is pressure on UAN barges, nothing new was reported last week, leaving the last trades at $210-$215/st ($6.56-$6.72/unit). There was speculation that something below $210/st FOB could be done. As with urea, sellers remained optimistic once field conditions improved.
Eastern Cornbelt: UAN-32 continued to be quoted in the $255-$265/st ($7.97-$8.28/unit) range FOB regional terminals. One Illinois source put the dealer market for spot tons firmly at the $260/st ($8.13/unit) FOB level in his trade area last week.
Western Cornbelt: UAN-32 remained in a broad range at $245-$265/st ($7.66-$8.28/unit) FOB regional terminals to the dealer, with the low reported in southern Missouri. One source put the common dealer market in his trade area at the $255/st ($7.97/unit) FOB level in late March.
California: UAN-32 was pegged at $247-$258/st ($7.72-$8.06/unit) FOB in the region, up slightly from last report, with delivered UAN-32 at $275-$285/st ($8.59-$8.91/unit) in the state. The dealer market FOB Stockton was quoted in the $247-$252/st ($7.72-$7.88/unit) FOB range last week.
Pacific Northwest: Sources tagged the UAN-32 market at $270-$285/st ($8.44-$8.91/unit) DEL in the Pacific Northwest, depending on location.
WesternCanada: UAN-28 was unchanged at $294-$310/mt ($10.50-$11.07/unit) DEL, with the low in Manitoba and the upper end in Alberta. Dealer postings were referenced as high as $320/mt ($11.43/unit) DEL in the region
AMMONIUM NITRATE
U.S. Gulf: The market remained quiet. Sources said there was little demand on the barge market – nor product actually available. The last trades continue to be called $252-$253/st FOB, with sellers quoting $260-$265/st FOB for the next round of business.
Western Cornbelt: Ammonium nitrate was steady at $285-$290/st FOB, with the low in Missouri and the upper end in Iowa.
California: No market was reported for ammonium nitrate in California. CAN-17 was unchanged at $255-$275/st FOB in the state.
Pacific Northwest: Ammonium nitrate was quoted at a $348-$365/st rail-DEL in the region. CAN-17 pricing remained at $245-$250/st FOB and $260/st DEL.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was unchanged at $230-$235/st FOB or DEL.
Western Cornbelt: Granular ammonium sulfate remained at $225-$230/st FOB in the region.
California: Ammonium sulfate was steady at $220-$247/st FOB, depending on grade and location, with the upper end quoted for granular sulfate in desert locations. IRM’s postings for regular grade ammonium sulfate moved on March 8 to $235/st FOB Chico, with fluid grade moving on that date to $225/st FOB Chico and $220/st FOB Sacramento.
Pacific Northwest: Granular ammonium sulfate was pegged at $240-$245/st DEL, reflecting a slight increase from last report. IRM’s postings moved on March 8 to $240/st FOB and $245/st DEL for granular and regular grade ammonium sulfate in Washington, Oregon, Idaho, and Montana, with fluid grade sulfate postings moving on that date to $170/st FOB and $175/st DEL in those four states.
Western Canada: Granular ammonium sulfate remained at $325-$335/mt DEL to the dealer, with postings at the $340/mt DEL level on the upper end.
PHOSPHATES
Central Florida: Although Mosaic was limited on inventory, mainly due to export sales and a tight sulfur market, sales were up in the Central Florida DAP market last week. Florida and Georgia were in the market, and the Northeast was coming on strong.
The Northeast was a bit of a surprise, considering the heavy rain and snowfalls the area has had this winter. However, buyers were anticipating drier conditions during the next few weeks, and were ensuring they had enough to meet farmers’ demands.
The calendar said spring arrived last week, but that doesn’t mean a lot if the ground is too wet to work. Ground conditions vary widely, and some places will be weeks later getting started than other locations.
Even in Texas, which should have already begun its spring season, truck sales were only slowly beginning to increase. Nearby areas in Oklahoma were still too wet for farmers to work.
Still to be determined was the impact of PhosChem’s sale of six million mt to India under a three-year contract that called for two million mt a year. If India heavily draws its product in the early stage, the shortage will be felt on the domestic market – and prices will bounce up.
Yara settled April ammonia prices for Tampa at $415/mt, down $35/mt from March’s $450/mt FOB. One of reasons given was lower production levels by Mosaic, which were believed to be below 80 percent of capacity. Mosaic’s reduced production was due in large part to a shortage of molten sulfur. Second-quarter sulfur contracts will begin sometime after April 1, and the price will likely rise – possibly to around $200/lt, according to some sources.
The Central Florida DAP price range last week changed from $410-$415/st FOB the previous week to $415-$420/st FOB, primarily due to higher producer prices. Mosaic’s posted price moved up from $410/st FOB to $415/st FOB, while CF’s price matched Mosaic’s. PCS Sales was charging market-based prices. The prices from Agrifos were $450/st FOB for DAP and $460/st FOB for MAP, but railcars were about $5/st FOB less, if available.
U.S. Gulf: Temperatures in the Midwest were on the rise last week, but the ground was too wet for farmers to work in their fields. A trader complained that rain or snow has hit every three or four days, and that has delayed spring planting.
NOLA DAP barge sales were down last week – and prices went the same direction. However, the number of barges available for sale remained quite low, and will probably not be sufficient to meet dealer demand once the season kicks into high gear. That will happen relatively quickly, and those with barges in place will benefit.
The USDA will unveil its corn crop estimate on March 31 at 7:30 a.m. CDT. Unofficial estimates were running around 88 million acres, and that will probably be pretty close to what the USDA will say. Assuming corn prices continue to be in relatively good shape, farmers will likely use ample amounts of phosphate to reap the benefits.
Only a few NOLA DAP barge deals could be found last week, and they were below the previous week’s range. However, the lower prices for barges would help terminals, which were posting prices between $445/st FOB and $455/st FOB last week.
The Army Corps of Engineers scheduled the Mississippi River north of St. Louis to reopen on April 4. Still, high water and possible flooding due to heavy rain and snow during the winter months could present some problems, because a large portion of the snow had still not melted.
Minnesota is not normally one of the first to get started on the spring season, but it may be one of earliest this year due to drier conditions and warming temperatures.
The NOLA DAP barge price dipped last week in response to a lack of activity. Deals were found in the $415-$420/st FOB range, which was down from the previous week’s range of $425-$430/st FOB, but offers appeared to be moving upward toward the end of the week, generally in the $417-$418/st FOB range after falling early in the period.
Eastern Cornbelt: DAP was pegged at $450-$465/st FOB regional warehouses, with the low out of river locations in Illinois and the upper numbers inland. MAP was $15/st higher than DAP. 10-34-0 was unchanged at $360-$370/st FOB in the region.
Western Cornbelt: DAP was reported at $445-$455/st FOB, with the low out of river warehouses in southeastern Missouri. Another Missouri source put the dealer market in his location solidly at the $450/st FOB level in late March. MAP was $15/st higher than DAP, and an Iowa source quoted truck-delivered MAP at the $475/st level to his location.
10-34-0 was quoted at $350-$370/st FOB in the region; an Iowa source put the dealer market at the $360/st FOB level in his trade area in late March.
Effective April 1, Agrium’s phos acid postings will increase to $785/st rail-DEL for both SPA and MGA in Iowa, Nebraska, Minnesota, the Dakotas, Wyoming, Colorado, Kansas, New Mexico, Oklahoma, and Texas.
California: Phosphoric acid pricing remained at March posted levels of $8.15/unit DEL in the state for both super phosphoric acid (SPA) and merchant grade acid (MGA), with Simplot referencing MGA at $8.35/unit FOB. Simplot reported that it will raise its postings by 30 cents/unit effective April 1, bringing postings to $8.45/unit DEL for SPA and MGA, and $8.65/unit FOB for MGA. Agrium is also hiking its SPA and MGA postings on April 1 to $845/st rail-DEL in California and Arizona.
DAP was steady at $485-$490/st FOB or DEL in the state, while MAP was pegged $5/st higher at $490-$495/st FOB or DEL. 16-20-0 remained at $324-$331/st FOB. 10-34-0 was pegged at $368-$380/st FOB, but sources said a $10/st increase would take effect April 1 after the phos acid pricing increase.
Pacific Northwest: SPA and MGA remained at $8.15/unit DEL in the region. Simplot reported that it would raise its phos acid postings by 30 cents/unit on April 1, bringing the number to $8.45/st DEL for both SPA and MGA. Agrium will raise its SPA and MGA postings as well on April 1, to $845/st rail-DEL in Idaho, Montana, Nevada, Oregon, Utah and Washington.
DAP and MAP remained at $485-$490/st FOB or DEL, with 16-20-0 quoted at $319-$325/st DEL in the region. 10-34-0 was tagged at $375-$385/st FOB in the region, but sources said a $10/st increase would take effect in April following the phos acid pricing hike.
Western Canada: Several sources noted a slight softening in spot MAP prices in parts of the region, but one attributed the momentary weakness to “some nervous dealers who can’t wait until spring breaks.” He said the price drift would stop as soon as parts of the U.S. begin rolling.
MAP was pegged at $582-$617/mt DEL to the dealer, depending on location, with the low reported in Manitoba and Saskatchewan and the upper end in Alberta and British Columbia. Dealer reference levels were quoted as high as $625/mt DEL in the region.
10-34-0 was unchanged at $470-$483/mt DEL in Western Canada.
U.S. Export: With the two million mt deal India inked with PhosChem last week, that country has already signed contracts for about five million mt for this year. However, it will probably still need an additional million mt to meet its needs.
India has also agreed to buy 500,000 mt from KeyTrade, 500,000 mt from China, and at least 1 million mt from other sources. It was estimated to need around six million mt this year.
PhosChem released few details on the three-year, six-million mt contract it signed, but other sources said it was for a fixed price of $500/mt CFR. After deducting for freight, that would put the Tampa price at about $440/mt. However, no other customers will be able to get phosphate close to that price. Shortly after that transaction was announced, a sale was made into Latin America at $460/mt FOB.
Also, very late the previous week Agrifos made a small sale into Latin America at $470/mt FOB.
Nevertheless, all of those sales were well below the previous week’s range of $505-$510/mt FOB. Based on the recent sales, the export DAP price range last week was $440-$470/mt FOB. The range was most likely to increase next week and thereafter in the short term.
Correction: The U.S. Export price for the issue dated March 22 was changed from $505-$510/mt FOB to $470/mt FOB.
India: The contracts with PhosChem and PhosAgro, along with smaller deals, should keep Indian users in good stead for this season. Sources say the large amount of buying that took place this season was because the country finally emptied out the warehouses from port to field. The whole distribution system needs to be replenished.
The PhosAgro and PhosChem deals are set for a total of 4 million mt, and could reach 6 million mt. But these are not the only suppliers.
Gavilon, JMPC, and OCP have all reportedly either concluded deals with Indian buyers or are about to. The total in all these deals, however, is just shy of the 1 million mt mark.
One Asian trader noted that the netbacks for the smaller deals will not be as good as what PhosAgro and PhosChem were able to achieve.
Late in the week, word from India was fresh business included the following, all at US$500/mt CFR India, with additional quantities being negotiated: IPL, 500,000 mt from JPMC ex Jordan; IPL, 350,000 mt from Keytrade ex open origin; Coromandel International Ltd., 90-100,000 mt from Agora ex China; Zuari, 75,000-90,000 mt from Helm ex China; Nagarjuna, 225,000 mt from Helm ex China; MCFL, 75,000-90,000 mt from Dreymoor ex China.
On the phosphoric acid front, Foskor has agreed with CFL to a price of US$775/mt CFR East Coast with 30 days credit for shipment March-June, an increase of US$147.50/mt on the first quarter price of $627.50/mt CFR. OCP has reportedly followed with an agreement for March-June shipment at $775/mt CFR with 30 days, an $85/mt increase on the February price of $690/mt CFR.
POTASH
U.S. Gulf: Barge prices were called $365-$375/st FOB.
Eastern Cornbelt: Potash was quoted at $405-$417/st FOB regional terminals, with producer postings at the $420/st FOB level.
Western Cornbelt: Potash pricing remained at $395-$412/st FOB regional warehouses, depending on location, with the low reported in Missouri and the upper end in Iowa on a spot basis. One source put the common dealer price for granular potash at the $405/st FOB level out of river warehouses in late March.
California: Potash was unchanged at $440-$460/st DEL in California, depending on grade. Potassium nitrate pricing remained at $929-$996/st FOB, with the low for bulk tons and the upper end for bagged product.
The sulfate of potash (SOP) market was steady at $590-$610/st FOB for bulk tons, depending on grade and supplier. Great Salt Lake Minerals Corp., a subsidiary of Compass Minerals, will raise its SOP specialty fertilizer product prices by $30/st on April 1, for both standard and granular products.
Pacific Northwest: Potash was steady at $435-$445/st FOB regional warehouses and $440-$450/st DEL, depending on grade and location. A Washington source put the market in his trade area at $440/st FOB and $448/st DEL in late March.
Western Canada: Potash to Canadian customers FOB Saskatchewan mines remained at $431-$437/mt FOB, depending on grade.
India: ICL Fertilizers on March 22 announced it has signed additional agreements to supply 430,000 mt of potash to its customers in India. This is in addition to the company’s agreement, announced last week, to supply 1 million mt of potash to another customer in India. The aggregate sale of 1,430,000 mt of potash to the Indian market over the next 12 months represents an all-time record for the company. Under the terms of the new agreements, ICL Fertilizers will supply 430,000 mt of potash, including an option for 90,000 mt, for a 12-month period beginning in April 2010, at a price of $370 mt CFR.
SULFUR
Tampa: With second-quarter sulfur price negotiations on the horizon, supplies remained tight and there was nothing to indicate that would change during the next couple of months. Speculation was that sulfur suppliers will seek a hefty increase to around $200/lt for molten to Tampa.
Sources said spot deals, which could not be confirmed, were running around $200/lt to Tampa, and world prices were even higher.
Refinery production was hovering around 80 percent and sweet crude was still the rule, which meant less sulfur production. Meanwhile, the price of gasoline at the pump was on the rise last week, as refineries were attempting to recover lost income from higher oil prices and reduced consumption. High levels of unemployment continued to take their toll on driving.
Pakistan: Pak-Arab Refinery Ltd. has issued a tender to sell 4,500 mt from April-June. The minimum reserve base price is US$241/mt excluding general sales tax and special excise duty. Delivery will be from Punjab. Bidders have to bid for at least 300 mt. Bids are due March 31.
MARKET NOTES
India: IFFCO is eyeing some US$4 billion in capital expenditures for capacity expansion in India, Argentina, and Jordan. “Of the total $4 billion proposed investment, $3 billion would be funded through borrowings and the rest through internal accruals of Iffco and our joint venture partners,” said IFFCO Managing Director U.S. Awasthi. IFFCO, the country’s largest fertilizer maker, would set up a new ammonia plant in Argentina for $800 million. IFFCO already owns 10 percent in Americas Petrogas, a Canadian oil company that is involved in gas exploration in Argentina’s Neuquen Basin in central Argentina. The gas produced by Americas Petrogas could fuel the ammonia plant. Avasthi said IFFCO would invest $100 million on this plant, matched by an equal investment by the joint venture partner. The remaining $600 million would be funded through debt, he said.
IFFCO would also invest $1 billion each in expanding its Nellore plant in Andhra Pradesh and its Kalol facility in Gujarat. At the Kalol plant, IFFCO will set up a phosphoric acid plant that will produce the equivalent of 1 million mt/y. This would go into the fertilizers produced at its Kandla plant. Another $1 billion investment will go into a new phos acid plant being set up by IFFCO and Jordan Phosphate Mines Co. at Eshidiya.
India: The Union Environment and Forests Ministry has granted first-stage environmental approval to Aditya Birla Nuvo Ltd. (ABNL) for its urea expansion project. The project envisages setting up one 2,200 mt/d ammonia unit and one 3,850 mt/d urea unit within the existing fertilizer complex at Jagdishpur in Uttar Pradesh. The facility is also known as the Indo-Gulf fertilizer division of ABNL. The complex currently comprises one 1,910 mt/d ammonia unit and two urea units, each of 1,625 mt/d capacity.
Bangladesh: The country will get a soft loan of $230 million from the Chinese government for setting up the proposed Shah Jalal Fertilizer Factory, in the Natural Fertilizer Factory area of Fenchuganj in Sylhet, northeast of Bangladesh. A formal Memorandum of Understanding was signed by both governments when Bangladesh Prime Minister Sheikh Hasina recently visited Beijing. The factory to be set up by Bangladesh Chemical Industries Corp. would have a daily production capacity of nearly 1,750 mt/d of urea, which is 0.5 million mt of urea a year.
Saudi Arabia: Ma’aden, which is currently building a giant phosphate fertilizer complex in Saudi Arabia in a joint venture with Sabic, reports that it is conducting a feasibility study for a second phosphate project. The new study is on property northeast of the city of Tarif. The new mine could add about 1.5 million mt of ore. Recent estimates indicate estimated resources in the mining license at 234 million mt, with a concentration ranging from 17-19 percent phosphorus pentoxide “P2O5.”
Ma’aden said the existing project is slated to begin production by the end of the year and will produce 2.92 million mt of DAP.
Jordan: Jordan Phosphate Mines Co. (JPMC) has bought the stake of its Indian joint venture partner, Southern Petrochemical Industries Corp. (SPIC), in Indo-Jordan Chemicals Co. (IJCC) for US$50.6 million, according to the Jordanian and Indian presses. SPIC had owned 52.2 percent of IJCC. The Arab Investment Co. of Saudi Arabia reportedly owns 13 percent of the jv. The jv includes a phosphoric acid plant with a capacity of 700 mt/d and a sulfuric acid plant that can produce 2,000 mt/d.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 70.10 | 70.71 | 39.24 |
| CF Industries | CF | 90.03 | 93.12 | 73.22 |
| Intrepid Potash | IPI | 28.75 | 30.72 | 19.31 |
| Mosaic | MOS | 58.44 | 59.56 | 45.47 |
| PotashCorp | POT | 119.97 | 122.88 | 83.52 |
| Terra Industries | TRA | 45.60 | 45.88 | 23.37 |
| Terra Nitrogen | TNH | 80.86 | 85.87 | 131.39 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 32.88 | 33.59 | 14.29 |
| Deere & Co. | DE | 60.20 | 59.25 | 34.67 |
| Scotts | SMG | 45.58 | 43.00 | 34.90 |
SPOT BARGE PRICES
CF, Terra deal could be complete in early-to-mid April
CF Industries Holdings Inc.’s acquisition of Terra Industries Inc. could come in early-to-mid April, according to knowledgeable sources last week. CF’s exchange offer for Terra shares will expire April 2. If 90 percent or more of Terra shareholders tender, then the deal could be concluded very soon. If less than 90 percent tender, however, the close may have to await an official Terra shareholders’ meeting.
>The deal was structured in such a way that CF shareholders do not have to vote on it.
Wall Street was not too kind to CF after the news of the Terra acquisition appeared imminent. CF shares dropped from $100.61 on March 11, before it was announced that Agrium Inc. and Yara International ASA were dropping out of the merger race, to $93.12 a week later on March 18. One industry observer said that CF now has a very big chunk of nitrogen, and it had better hope that natural gas prices remain low.
Agrium, on the other hand, saw its shares go up 5.5 percent, from $66.78 to $70.71, over the same span.
There was a lot of back-and-forth between analysts and industry players mulling the final outcome. While some said Agrium was being rewarded by the stock market for not paying too much for CF, others wondered if it might have been worth it to Agrium to pay up for CF and thereby avoid having a much stronger CF/Terra competitor. Still others said that Yara and Terra were a perfect fit.
In the end, CF got what it wanted and Terra shareholders received a large premium, more than doubling the value of the year-ago share price. The biggest loser might well be the Sioux City Chamber of Commerce, which will lose Terra as the headquarters for a company with annual revenues of $1.6 billion. And with expected synergies of $135 million from the merger, jobs will be lost.
According to a poll conducted by Green Markets last April (GM April 20, 2009), industry respondents were more in favor of a CF/Terra deal than Agrium/CF. Overall, 59.9 percent of respondents said they opposed the Agrium/CF merger, 42.3 percent said they opposed the CF/Terra merger, and 29.6 percent said they were not opposed to either merger. At that time, however, more respondents felt an Agrium/CF deal would be the final conclusion, with 43.7 percent of respondents believing the Agrium/CF deal would be realized, while 23.2 percent said they thought CF would acquire Terra. Overall, 34.5 percent of respondents said they thought neither merger would occur.
Warmer weather brings flooding to Midwest
A week of warm weather pushed numerous Midwest rivers to flood stage last week as the region’s large snowpack began to melt and ice jams impeded water flow.
The Red River between North Dakota and Minnesota was at 31.21 feet in Fargo at midweek, and is expected to reach 38 feet by March 21 – perilously close to last year’s record of 40.8 feet. Flood stage at Fargo is 18 feet, with “major stage” flooding beginning at 30 feet. There have never been back-to-back years of major-to-record flooding along the Red River in its 110-year history, according to the National Oceanic and Atmospheric Administration (NOAA).
Although many fields were under water along the river last week, it is too early to tell if the current flooding will affect spring planting in the region. If spring rains compound planting delays in April and May, the picture could change drastically. Last year’s wet spring and historic flooding left almost 1.9 million acres unplanted in North Dakota, according to USDA’s Risk Management Agency.
In Mitchell, S.D., the James River was forecast to reach 25.3 feet by March 19, tying the record for that location. In St. Paul, Minn., the Mississippi River was forecast to reach flood stage by March 20 and “major stage” by March 22, according to the weather service. Forecasters said the river should stay well below the record of 26 feet in that location, however.
In Iowa, ice jams caused the Raccoon River to rise by as much as three feet in just several minutes last week. Des Moines officials closed some low-lying roads and brought in extra pumps as it braced for flooding from the Raccoon and Des Moines Rivers, both of which were at moderate to major flooding levels at midweek.
At Linn Grove, Iowa, the Little Sioux River set a record of 22.53 feet and was still rising as the week progressed. The Mississippi River at Burlington, Iowa, was expected to reach 16.3 feet by the weekend, more than a foot above the 15-foot flood stage. The Iowa River reached 22 feet at Columbus Junction on March 17 and was expected to climb to 24.3 feet in Wapello by March 19, more than 2 feet above the 22-foot flood stage.
The National Weather Service in the Quad Cities of Davenport and Bettendorf, Iowa, and Rock Island and Moline, Ill., reported on March 14 that all area rivers were at flood stage. The Mississippi River at Davenport was at 11.76 feet March 17, just below the 15-foot flood stage, but was expected to rise to 13.6 feet by March 24.
A Missouri source reported minor flooding along the Grand and Missouri Rivers last week, noting that the Grand came within three feet of topping levies in some locations.
More than a third of the contiguous U.S. faces a high or above average flood risk this spring, the National Weather Service reported Tuesday. “We are looking at potentially historic flooding in some parts of the country this spring,” said Jane Lubchenco, head of NOAA. Iowa, Minnesota, and the Dakotas face the greatest flood risk.
NOAA noted several factors contributing to this year’s flood threat, including a snowpack that is more extensive than in 2009, and is among the top 10 since World War II; above normal stream flows; December precipitation that was up to four times above average; ground that is frozen to a depth as much as three feet below the surface in some locations; and milder temperatures since mid-March that have contributed to a rapid snow melt.
There were signs of optimism, however. While precipitation was forecast for parts of Iowa and Nebraska over the weekend, most Midwest locations enjoyed a relatively dry week in combination with the warm temperatures.
On March 17, the Mississippi River crested just north of St. Louis and the Missouri River began to fall. The St. Louis area was experiencing only minor flooding last week, while Hannibal, Mo., Quincy, Ill., and Chester, Ill., saw moderate flooding. Forecasters said they expected the Mississippi River in most Missouri locations to stay above flood stage for 7-10 days, with most of the flooding confined to low-lying and agricultural ground.
The Wapsipinicon River at DeWitt, Iowa, was near its crest of 12.79 feet on March 17. Water levels there were expected to fall gradually after that, but remain at about 12.5 feet until the following week, or about a foot-and-a-half above flood stage.
The Skunk River in Augusta, Iowa, was expected to drop below the 15-foot flood stage by March 19, after cresting at 25.15 feet over the previous weekend. That crest was less than 2 feet short of the record set in 1973. The Des Moines River crested at 22.17 feet at St. Francisville, Iowa, on March 14, but was expected to fall below the 18-foot flood stage late on March 18.
The Rock River in Iowa was also gradually falling last week after cresting at just over 13 feet on March 14. Forecasters said it was expected to drop below the 11-foot flood stage by the weekend.
The upper Midwest was not the only region battling floods last week. A severe storm that combined near-hurricane-force winds with heavy rain pummeled the Northeast on March 13-15, causing at least nine deaths and leaving nearly a half million customers without electricity in Pennsylvania, New Jersey, New York, and Connecticut. The rain also spurred a rapid snow melt for many locations in the region, which brought rivers and streams out of their banks and prompted flood warnings throughout the Mid-Atlantic and New England states.
Local reports said the Potomac River at Point of Rocks in northern Virginia reached major flood stage in the wake of the storm, while the Merrimack in central New England, the James River in Virginia, and the upper Ohio River rose to minor or moderate flood stages last week. The Susquehanna River in Pennsylvania was expected to remain below flood stage.
DOT provides temporary waiver to HOS rule for 2010 planting season
The Department of Transportation’s (DOT) Federal Motor Carrier Safety Administration (FMCSA) on March 18 issued a limited 90-day waiver under the federal agricultural hours of service (HOS) exemption for the delivery of anhydrous ammonia during the 2010 spring planting season.
The waiver came after several trade groups, including The Fertilizer Institute (TFI) and the Agricultural Retailers Association (ARA), warned that FMCSA’s interpretation and implementation of the HOS exemption was too narrowly focused and excluded certain distribution activities that were vitally important to U.S. agriculture. “Had this action not been taken, spring planting season could have been pretty tough for both farmers and retailers,” said TFI’s Kathy Mathers.
The waiver, which is effective immediately, allows motor carriers with a satisfactory safety rating to use the agricultural HOS exemption when their drivers are delivering anhydrous ammonia from any distribution point to a local farm retailer or to the ultimate customer, as long as the transportation takes place within a 100 air-mile radius of the wholesale distribution point or the farm retailer.
The crux of the debate over the intent of the HOS exemption was outlined in a March 18 Federal Register notice. “Longstanding FMCSA guidance on its HOS regulations has consistently allowed that the agricultural operations exemption applies to the transportation of farm supplies from the local farm retailer to the ultimate consumer within a 100 air-mile radius,” the notice states. “FMCSA’s interpretation, however, has not extended the HOS exemption to deliveries from wholesalers located at port or terminal facilities to either local farm retailers or farms.”
FMCSA said its re-examination of the issue, however, “has made it clear that the exclusive emphasis of the Agency’s regulatory guidance on deliveries from local retailers to the ultimate farm consumer may not reflect today’s economic reality. Like farms, local retailers have limited storage capacity and therefore must constantly replenish their supplies during the planting and harvesting seasons. They are part of the ‘just in time’ distribution system that extends from the wholesaler to the ultimate consumer of the supplies. Given this reality, FMCSA has determined that it is in the public interest to issue a waiver to provide regulatory relief for the transportation of anhydrous ammonia during the 2010 spring planting season.”
TFI and ARA had been working with DOT and several members of Congress to resolve the issue for several months. The National Council of Farmer Cooperatives and the Agricultural and Food Transportation Conference of the American Trucking Association had also pressed for a broader interpretation of the HOS exemption. The trade groups found allies in Reps. Blaine Luetkemeyer (R-Mo.) and Sam Graves (R-Mo.), both members of the House Agriculture Committee.
“I’m glad that the DOT and the FMCSA agree that the ‘just in time’ delivery system of anhydrous ammonia should remain exempted from the hours of service regulations during the busy planting and harvest seasons,” said Graves. “The agriculture industry and farmers have enough to worry about, without adding more excessive regulations from Washington on top of it. While there is more work to be done in this issue, the DOT and FMCSA have taken a step in the right direction.”
The 90-day waiver only applies to carriers delivering anhydrous ammonia, with the original interpretation of the exemption still applying to other input products.
ARA said it “commends DOT for making this decision to allow for movement of anhydrous ammonia from terminal to retailer during the 2010 planting season, but also recommends that transportation of all farm supplies from the terminal to the retailer should be exempted under the current rule. We will continue to work with DOT to get movement of all farm supplies along the supply chain exempt from the HOS rule during planting and harvest season, as Congress originally intended.”
Koch to increase terminal capacity in Brazil
Koch Fertilizer Trading Sàrl and Rocha TOP Terminais e Operadores Portuários Ltda. have entered into an agreement whereby Rocha TOP will build a dedicated warehouse facility in Paranagua to store up to 57,000 mt of urea and other fertilizers for Koch Fertilizer Trading. Construction of this warehouse will be concluded early in 2011.
“This agreement will allow us to help key fertilizer customers better manage their price risk, optimize working capital, and improve overall logistics in the region,” said Jim Sorlie, Koch Fertilizer LLC’s senior vice president, supply and trading.
“We are pleased to enter into this agreement to expand storage capacity in Paranagua for Koch Fertilizer Sàrl’s customers,” said Hélio Fiqueiredo Freire Fiho, director of Rocha TOP.
Koch Fertilizer LLC and its affiliates are significantly expanding their ability to serve customers and suppliers by developing new deepwater terminals and expanding existing operations at ports around the world. In addition to Paranagua, new locations include Avonmouth, U.K.; Sète, France; Geelong, Australia; Topolobampo, Mexico; and Charleston, S.C., U.S.A.
The dry bulk, liquid, and ammonia distribution systems of Koch Fertilizer, LLC and its affiliates are global, and include marketing and distribution capabilities worldwide. Marketing offices are located in Wichita, Kansas; Brandon, Manitoba; the Cayman Islands; Geneva, Switzerland; Marlborough, U.K.; Paris, France; Singapore; and Melbourne, Australia.
“We believe our terminal distribution system is one of the largest and most diverse of its kind in the world.” said Steve Packebush, president of Koch Fertilizer LLC.
PotashCorp to pay C$420,000 penalty
Saskatoon-PotashCorp has pled guilty to one charge under The Occupational Health and Safety Act, 1993, and was fined a total of C$420,000. The company pled guilty to contravening section 3(a) of the Act for failure to ensure the health, safety, and welfare at work of all of the employer’s workers. Total fines include $300,000, the maximum penalty allowable under OHS legislation, and a maximum victim fine surcharge of $120,000. The government said this is only the second time the maximum penalty under occupational health and safety legislation has been applied in Saskatchewan. These charges were the result of the investigation by Occupational Health Officers into the death of Robert Tkach, 61, who died in an underground jeep accident at the Lanigan Potash Mine (GM Jan. 11, p. 10).