Morris, Minn.-Researchers are saying that the construction of a pilot project for producing electricity and anhydrous ammonia from the wind may be completed by next fall. The design and royalty agreement is being completed with successful project bidder Fagen Inc. Project engineering will begin shortly on West Central Research and Outreach Center’s “wind power to nitrogen fertilizer” pilot project, which aims to put anhydrous ammonia production as close as the nearest wind turbine, according to Mike Reese, the center’s renewable energy director. Reese believes anhydrous ammonia could be produced in the Midwest at a lower cost than the nitrogen fertilizer that is now shipped from the Gulf of Mexico and Canada. He indicated that it is a way to add value to wind power that may be captured from turbines on farmers’ land – and it can be sold through local cooperatives. Reese explained that hydrogen is produced through electrolysis. Hydrogen and oxygen will be separated from water and wind electrical energy in an electrolyzer by a series of cells with special membranes under charge. In a different process, nitrogen will be separated from air via a molecular sieve. Then, under the appropriate pressure and temperature, hydrogen and nitrogen will be introduced together into a reactor and passed through a catalyst bed. A portion of the hydrogen and nitrogen will form NH3 in a modified Haber Bosch high-pressure process.
All posts by traceybg@gmail.com
AFBF applauds Senate delay of climate legislation
Washington-Senate Democratic leaders on Nov. 17 said they would delay debate on climate change legislation until spring 2010, focusing instead on health care and legislation tied to economic recovery. The decision was greeted with enthusiasm by various industry and agricultural groups, including the American Farm Bureau Federation (AFBF). “We applaud the decision by Senate leadership to delay consideration of climate change legislation until the spring of 2010,” said AFBF President Bob Stallman on Nov. 19. “This move offers a great opportunity for lawmakers to go back to the drawing board and re-assess the need for this legislation and the impact it will have on all Americans.” Climate change legislation was passed by the Senate environment panel earlier in November, and the House of Representatives narrowly passed its version of a climate bill last June (GM June 29, 2009). “Legislation previously approved by the House, and a similar bill approved on a party-line vote by a Senate committee, would impose higher energy and food costs on consumers,” Stallman said. “The bills also would create an energy deficit due to limited alternatives. Farmers and ranchers would see higher fuel, fertilizer and energy costs. And the cap-and-trade provisions would do little more than downsize American agriculture and our ability to produce food in this nation.” Stallman also referred to the mid-month announcements that Pres. Obama and other world leaders were scaling back ambitions for a global climate change summit in Copenhagen in December. “We now know there will be no international agreement resulting from the upcoming meeting in Copenhagen,” he said. “Furthermore, we have heard testimony from the administrator of the Environmental Protection Agency that the House-passed bill would have no significant impact on the global climate. These bills represent all pain and no gain for our nation and American agriculture and now the Senate has a chance to correct that error.” The White House said Pres. Obama was working with Senate lawmakers to move the legislation as quickly as possible. The Senate Finance Committee may begin deliberations on the climate bill in January, according to Sen. Barbara Boxer (D-Calif.). The Commerce Committee may also weigh in on some of the bill’s provisions.
Simplot receives grant for energy efficiency
Pocatello-The J.R. Simplot Co. is one of two Idaho companies getting a $350,000 U.S. Department of Energy grant from the Idaho Office of Energy Resources to help make energy efficiency improvements at its Pocatello plant and three of its other Idaho sites. Simplot contributed matching funds to leverage the grant, which will be used to complete projects identified through state assessments. The projects are estimated to save more than 55,783 million BTUs of natural gas and 7.56 million kilowatt-hours of electrical energy, with savings comparable to the energy used by 56,000 Idaho homes.
Cummins debunks Navistar SCR suit
Columbus, Ind.-Competitor Cummins says Navistar International Corp. is “grasping at straws” in its court battle with the U.S. Environmental Protection Agency over selective catalytic reduction for reducing diesel engine exhaust. Navistar’s case is important to U.S. truck and engine makers, along with fertilizer producers who will provide the urea solution to reduce nitrogen-oxide pollution, because SCR is the preferred approach in the industry for meeting the EPA’s 2010 emissions standards for diesel engines. In its latest move, Navistar is objecting to the delay of its court challenge of federal guidelines for complying with new, tougher standards for diesel-engine exhaust. EPA late last month asked a federal appeals court to postpone proceedings on Navistar’s case for 60 days while the agency reconsiders its compliance guidelines. “Essentially what Navistar is seeking is a delay in the 2010 regulations and … they are grasping at straws and looking for ways to slow it down,” said Cummins’ President and Chief Operating Officer Tom Linebarger. “It’s our view that the case has no merit and will not succeed in any way, and by the time the case is even heard we’ll be making engines and customers will be selling trucks.” According to press reports, Navistar, which is the only U.S. truck maker not planning to use SCR on its engines next year, particularly objects to an EPA provision allowing commercial trucks with SCR to operate for up to 1,000 miles once the urea solution has been used up. Navistar contends truckers could undermine the effectiveness of the new emissions regulations by repeatedly invoking the 1,000-mile exemption on SCR-equipped engines.
Management Briefs
Bill Erlenbush has been named Growmark executive director of corporate compliance, effective Dec. 1, 2009. He holds a bachelor’s degree in accountancy from the University of Illinois and an MBA from Illinois State University. Erlenbush, a Certified Public Accountant, has held a variety of positions with Growmark, most recently serving as controller. In this new role, he will have full responsibility for the consolidated Growmark compliance program, internal auditing, Growmark’s policies regarding privacy, record retention, and business continuity.
Doug Bentson, Certified Crop Adviser (CCA) at Grainco FS, Inc., Mazon, Ill., received the 2009 International Certified Crop Adviser of the Year award from the American Society of Agronomy (ASA) at their 2009 annual meeting in Pittsburgh. This annual award recognizes a CCA who delivers exceptional customer service, shows that they are leaders in their field, and contributes substantially to the exchange of ideas and the transfer of agronomic knowledge within the industry. The Illinois CCA Board and the Illinois Farm Bureau nominated Bentson for the award.
Grainco FS is part of the Growmark System of member cooperatives.
Boston-based Converted Organics Inc., which produces organic soil amendments and fertilizers with a proprietary high-temp composting system, is expanding its sales force into the northeastern and southeastern U.S. Michael Garrett and Michael Knight have been named sales representatives, reporting to Vice President of Marketing David Flannery. Garrett has over 18 years of experience, most recently in California for Global Organics/Bioflora. Knight has over 20 years of experience, including district sales manager for The Toro Co. and T-Systems International.
Yara International ASA has appointed Yves Bonte as the new head of the industrial segment, effective Jan. 1, 2010. Bonte, a Belgian national, is currently employed in The Netherlands by the LyondellBasell group as divisional senior vice president for their polypropylene business. Yara says he has extensive international experience in the chemical industry, running manufacturing operations, supply chain activities, and commercial entities where innovation and added value services were key success factors.
Bonte will be a member of Yara’s executive management team and report to Jørgen Ole Haslestad, Yara CEO and president.
Yara’s industrial segment develops and sells chemical products and industrial gases to non-fertilizer market segments. Industrial offers nitrogen chemicals as well as industrial explosives, with environmental applications such as NOx- abatement.
Market Watch
AMMONIA
U.S. Gulf/Tampa: A change in the Tampa price was reported just as Green Markets went to press before Thanksgiving. December business was reported at $325/mt DEL. Sources said demand from DAP producers was down slightly. In addition, unexpected ammonia was available from the AUM plant in Trinidad.
As of Nov. 23, Direct Hedge (DH) had the paper market as $340-$350/mt DEL Tampa for December and $335-$345/mt for January, with February-March at $330-$340/mt.
Eastern Cornbelt: Sources reported some ammonia movement to the field as weather and harvest conditions allowed it. Spot ammonia pricing was generally reported in the $355-$370/st range FOB regional terminals. Spring prepay ammonia was quoted at the $415/st FOB level out of spot Illinois locations, while some suppliers were referencing forward contract ammonia in the $430-$440/st range in the region for January through May shipments.
Western Cornbelt: The spot ammonia market remained at $330-$350/st FOB for prompt tons, with one Nebraska source claiming a spring prepay offer at the $375/st FOB level. The cash market FOB Palmyra, Mo., was reported at the $345/st level. Forward contract pricing for January through May ranged from $410-$435/st FOB in the region, depending on location and month of delivery. One dealer said fall ammonia movement has been brisk in his location, and all of the fall prepay tons will likely be applied if growers are able to finish the corn harvest.
Southern Plains: Sources reported only spotty fertilizer movement on wheat acres last week. One Kansas contact said conditions were nearly favorable for fall ammonia application in his trade area, but wet fields still needed more time to dry.
The anhydrous ammonia market remained at $290-$315/st FOB to the dealer, with the low quoted out of regional production points on a spot basis and the upper number reflecting dealer prices out of pipeline terminals in Kansas. One source talked of a spring prepay offer at the $375/st level FOB the pipeline last week.
South Central: The ammonia market was quoted at $370-$380/st FOB the Memphis market for spring prepay. There was no prompt demand in the region, sources said.
India: FACT closed its tender Nov. 24 for two cargoes of 7,500 mt each to be shipped in December and January. The offers show either a softening trend in pricing ideas from producers or a one-off concern about oversupply, say sources.
The apparent winners will be Qafco, which offered 7,500 mt at US$337/mt CFR for the first lot, and PIC, which offered 7,500 mt for the second lot at $338/mt CFR. Transammonia offered two lots each at $342/mt FOB.
One Asian source noted that FACT usually only negotiates with the lowest offering company for a reduction in price – and usually to no avail.
The December-January delivered price from Qafco is $3/mt off the October price it offered. The PIC price, however, is a healthy $7/mt off its previous offer.
One source opined that the lower prices may be a result of additional production coming online next month.
Middle East: The latest offers into the FACT tender confirm prices remain stable, with a softening trend.
Sources say higher freight rates and more capacity coming online are combining to bring down the Middle East price.
For now, the FACT tender confirms prices in the low $300s/mt FOB. Sources now peg the price at $300-$310/mt FOB.
Coming up, however, restored and new production should push down prices. The Sabic II and III plants are now slated to be back online next week. By the end of the year a new Iranian plant is supposed to be ready to start exporting.
Demand from India, while strong, is said to be easing off as demand for DAP goes into a seasonal slump.
Sources say the booming Asian markets are helping keep the price from a major slide.
UREA
U.S. Gulf: Granular urea barge prices soared last week, with sources saying they began at $295/st FOB and worked their way up to $310/st FOB as Green Markets went to press for Thanksgiving. Sources gave a long list of reasons for the surge, including “sunshine,” low inventories, general expectations of heavy nitrogen use in the spring due to both the lower fall ammonia consumption as well as increased corn acreage, higher corn prices, and a huge drop in imports. One source said that buyers have been pretty much non-existent for the past six months, and now all of a sudden they want urea as farmers are starting to finish up their harvest and ask about product. In turn, dealers are looking at empty bins and calling someone to buy urea.
Another source pointed to cold weather in China as a concern. Gas, oil, and coal that would have gone to industrials, such as fertilizer plants, is being shifted to residential consumption. As a result, he said, if this situation continues, it could impact China’s fertilizer production, keeping their nitrogen and phosphates off the export market. Some urea production has reportedly already been cut. Indeed, China could actually come up short for its own domestic use, as it has recently been buying phosphates from Florida.
At $295-$310/st FOB, sources say that the U.S. market can again attract imports. With a large shortfall of urea imports, it may take several vessels to take up the slack before there is a significant impact on prices. Sources said that traders have already been busy rounding up extra vessels for the U.S.
In the meantime, prills remain in short supply, and sources say they are at least keeping pace with granular.
As of Nov. 23, DH had the NOLA granular market for paper still at $280-$285/st FOB for December, with January at $294-$297/st FOB, February-March at $295-$300/st FOB, and April-June $280-$290/st FOB.
Eastern Cornbelt: The granular urea market had reportedly firmed to $320-$330/st FOB in the region. CF was listed at $325/st FOB Cincinnati, Ohio, and Peoria, Ill., for December, with forward pricing ranging from $335-$345/st FOB for January through May.
Western Cornbelt: Sources quoted the granular urea market at a firm $310-$325/st FOB in the region, with the low in southern Missouri on a spot basis. Several sources said the upper end of the range would likely be the norm by midweek. Urea pricing FOB St. Louis, Mo., was listed by one supplier at the $325/st level for December, with forward contract prices firming to $335/st in January, $340/st in February, and $345/st in March and April.
Southern Plains: Granular urea pricing had reportedly firmed to $315-$325/st FOB in the region, with the upper end reflecting new postings from some suppliers last week. One supplier was referencing forward contract urea for January through April at $345-$355/st FOB Inola, Okla.
South Central: Granular urea pricing was quoted in a broad range, with terminal values reported at $310-$330/st FOB last week. The upper end reflected new postings that took effect last week, and there was speculation that the low end of the range would no longer be available as the week progressed.
Southeast: Granular urea pricing was up from last report, with the dealer market quoted at $315-$320/st FOB port terminals. There were reports of spot postings as high as $330/st FOB in the region, but no sales were reported at those levels.
Pakistan: The country would not import more urea during Rabi season (Oct-March 2010) due to sufficient local production and imported stock, according to the National Fertilizer Development Centre (NFDC), which said Rabi 2009-10 started with an opening balance of 176,000 mt of urea. Domestic production during Rabi is estimated at 2,469,000 mt, with confirmed imports of 655,000 mt. TCP has awarded tenders for the import of 600,000 mt of urea at the rate of US$291/mt. All imports are expected during November and December 2009, and January 2010 – thus total urea availability would be around 3,299,000 mt, against estimated demands of 3,099,000 mt.
Middle East: Sources are now reporting that deals out of Egypt are pegged at $285/mt FOB. For the Arab Gulf producers, that merely confirms what they have been saying about tightening prices in the area.
Generally, when talking about business east of the Suez, the Arab Gulf producers enjoy a $10/mt FOB premium over the Egyptians because of the freight differential. If the Egyptian price holds and is carried over to the Indian and Pacific Oceans, then the Arab Gulf guys could see a substantial rise in their netbacks.
The problem figuring out just what the Arab Gulf price is right now is that only contract, formula-based cargoes are moving at this time.
Sources in Asia confirm the Egyptian price, but cannot offer any more guidance on the Arab Gulf price until a public event, such as a major tender, comes along.
With the Egyptian business done, sources are pegging the granular market at $270-285/mt FOB. Prills, which are not directly affected by the granular Egyptian sale, remain in the upper $260s to lower $270s/mt FOB.
Indonesia: Kaltim called a snap selling tender of 20,000 mt granular urea that closed Nov. 24. The tender brought out some high rollers. In the end, Liven snagged a deal at $297/mt FOB.
Results of the tender follow.
| Bidding Company | US$/mt FOB |
| Liven | 297.00 |
| Consolindo | 292.75 |
| Keytrade | 290.00 |
| Youngwoo | 288.00 |
| Indevco | 287.50 |
| Graha | 287.25 |
| Sakura | 285.75 |
| Parna Raya | 285.00 |
| Urbantara | 284.25 |
| Saturna | 284.00 |
| Toepfer | 282.50 |
| Diva | 282.00 |
| Limardi | 281.50 |
| Bintang Baja | 281.00 |
| Unitrade | 281.00 |
| Dtrade | 280.00 |
| Swiss Singapore | 272.75 |
Sources say Consolindo was bidding for Helm, Youngwoo for Ameropa, Sakura for Yara, Limardi for Summit, and Bintang Baja for Transammonia.
Liven quickly received the award. One source jokingly said the award was made quickly just in case Liven wanted to rethink its bid.
The bid is $20 higher than the tender held just a few weeks ago. In that tender, Kaltim got $277.50/mt FOB for its material.
Industry watchers still expect to see Pusri come in with a tender offering up to 70,000 mt in 5,000 mt lots.
Black Sea: Sources are reporting a deal at $250/mt FOB. The problem for Asian traders is they are not able to confirm who bought the tons or where they are going.
One observer noted that a number of companies are looking to take positions on material for sale to India once a tender is called. The problem is that even when the price was $5/mt lower, Black Sea material was just barely competitive into India.
Now, however, with Chinese and Middle East prices moving up, a $250/mt FOB might work.
With the new deal, sources peg the market at $245-$250/ mt FOB.
India: The industry is still waiting to see what will happen. The appropriate government ministries are still looking over the numbers to determine how many tons of urea they think the country will need during the first quarter of the new year.
They are also looking at the rising international market and seeing how much money is in the treasury for subsidies.
Industry watchers say the most likely time for the tender to be called will be just after the IFA gathering in Malaysia. That means by the end of the second week of December.
China: Prices keep moving up.
Sources report prills are now at $275/mt FOB and granular is at $280/mt FOB.
The price is moving up – largely, said one trader, on expectations of sales to India. The domestic market is firm, but not strong enough to sustain the steady growth that has been taking place in the Chinese market.
Asian traders have been saying that the Chinese producers are playing an interesting game of chicken. Many are hoping that an Indian tender will be called in early December, with awards made almost immediately.
Then the traders winning the Indian business with Chinese tons will have to step lively to get a vessel into a port and loaded by the end of the year. So far, say sources, the Chinese government will only allow tons either in the process of being loaded or in a bonded warehouse with a vessel nominated to be shipped at the current 10 percent export duty. Starting January 1, the duty jumps to 110 percent.
NITROGEN SOLUTIONS
U.S. Gulf: While UAN did not have the same steam as urea last week, sources still said it was moving up. They put the most recent sales within the $168-$175/st FOB range ($5.25-$5.47/unit) and said the product was pushing hard toward $180/st, though others said it had not gotten there yet. Sources generally cited UAN’s strength as being fashioned by the same factors as urea (see urea section).
As of Nov. 23, DH had the December paper market as $165-$175/st FOB, with January-March much higher at $185-$195/st FOB, and April-June at $190-$200/st FOB.
Eastern Cornbelt: UAN was quoted at $6.50-$6.88/unit FOB regional terminals for cash market tons, up significantly from the prior week, and the market appeared to be a moving target. One supplier was reportedly referencing spring prepay tons at the $7.15/unit FOB level early in the week. CF’s cash market postings firmed on Nov. 24 to $7.15-$7.45/unit FOB Indiana terminals, $7.20-$7.30/unit FOB in Illinois, and $7.30-$7.60/unit FOB in Ohio, with forward contract prices ranging from $7.30-$7.65/unit FOB in Illinois and Indiana for January through May.
Western Cornbelt: Sources quoted the UAN-32 market at $195-$215/st ($6.09-$6.72/unit) FOB regional terminals for prompt tons, with the low again reported out of spot river locations in southern Missouri. An Iowa source quoted spring prepay offers at the $7.05-$7.15/unit FOB level early in the week. CF moved its list price for cash market UAN to $7.50/unit FOB Pine Bend, Minn., for the Nov. 25 to Dec. 4 order and shipping period.
Southern Plains: The UAN-32 market had reportedly firmed to $205-$210/st ($6.41-$6.56/unit) FOB regional production points for spring prepay. One source reported a $190-$200/st ($5.94-6.25/unit) FOB level for spot tons, but prompt demand was slim in the region.
South Central: The low end of the UAN-32 market was pegged at $185-$200/st ($5.78-$6.25/unit) FOB regional terminals for spot tons, but appeared to be firming rapidly. The upper end of that range was also quoted by one source for spring prepay offers last week. CF moved its cash market postings up significantly on Nov. 24, to $7.25/unit FOB Louisville, Ky., with Donaldsonville, La., postings at $6.30/unit for rail and $6.40/unit for truck.
Southeast: Sources reported firming prices for nitrogen solutions. The UAN market was pegged at $6.00-$6.09/unit FOB coastal terminals to the dealer, with one Georgia contact quoting delivered UAN-32 at the $205/st ($6.41/unit) level to his location. Vessel ton indications were reported at the $200/mt CFR level for current replacement costs.
Several sources continued to report spot deals for UAN-30 in the mid- to upper $160s/st ($5.50-$5.63/unit) FOB, but recent sales at those levels were not confirmed. Others discounted the lower numbers as older offers.
AMMONIUM NITRATE
U.S. Gulf: While barge prices continued to be called $200-$205/st FOB, a big thing was happening in the market last week, according to most sources. Activity. Barges were actually moving, and in that range. Sources reported recent sales for both domestic and imported product.
As of Nov. 23, DH had the paper market as $200-$215/st FOB for December-February.
Western Cornbelt: Ammonium nitrate was steady at $255-$260/st FOB in the region.
Southern Plains: Ammonium nitrate pricing was tagged at $245-$250/st FOB Catoosa, Okla.
South Central: Ammonium nitrate was quoted at $250-$260/st FOB regional terminals to the dealer.
Southeast: Ammonium nitrate remained at $270-$280/st FOB the Tampa market for the last business.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was up from last report at $185-$200/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate had reportedly firmed to $185-$200/st /st FOB in the region, with the upper end reported out of the Sioux City, Iowa, market.
Southern Plains: Granular ammonium sulfate remained at $175-$215/st FOB Texas shipping points, with the low FOB Freeport.
South Central: Granular ammonium sulfate was tagged at $185-$195/st FOB in the region, up $10-$15/st from last report.
Southeast: Granular ammonium sulfate was steady at $165/st FOB in the region. Delivered pricing was pegged at $165/st for standard and $195/st for granular, with reference levels for delivered tons in Florida steady at $168/st for standard and $205/st for granular.
PHOSPHATES
Central Florida: Prompt phosphate sales were made out of Central Florida last week, but unlike the Gulf and river markets, prices remained static.
The market appeared to be starting a long-awaited turnaround for the fall season, as farmers were bringing in their crops and dealers got tired of staring at empty bins. Inventories at all levels were lower than normal. To a large extent, the low inventories were the result of unexpectedly high export sales due to China’s entry in the market. Last week, the domestic market was claiming its share.
PotashCorp, which will begin a turnaround at its Aurora facility at North Carolina during the first two weeks of December, saw an increase in business, but did not return to normal levels at its White Springs processing plants in Florida. Although it did not have a Central Florida reference price, it was selling phosphate out of North Carolina at $285/st FOB.
Despite increased sales, the Central Florida DAP price range last week was unchanged at $270-$275/st FOB. Both Mosaic and PCS Sales were charging a $10/st FOB premium for MAP. Agrifos increased its prices to $305/st FOB for DAP and $310/st FOB for MAP for trucks, and $5/lt less than trucks for rail shipments. Mosaic hiked its Central Florida price to $285/st FOB, but had not made sales at that price.
U.S. Gulf: As farmers were working hard to get the balance of their crops out of the field, dealers, who have let their bins go empty, were sharply increasing their orders from terminals.
It should be a good year for farmers. Yields appeared to be good, and corn prices for December were above $3.90/bushel last week. Corn for December 2010 was $4.34/bushel. Last week, soybeans were listed at $10.27/bushel for January. Some of the credit for higher crop prices was attributed to hedge funds, and there was a fear that source of income might pull back from the market, but so far that had not happened.
Intermittent rain was slowing harvesting in the central Cornbelt but was nearing completion in the eastern areas, where rain was expected late in the week.
In general, inventories were down and that will continue, because production has been curtailed for the past several months and export sales have been up. As a result, the number of barges available for prompt delivery was very limited last week, and with the sharp increase in demand, prices were moving up quickly. Some producers and traders who had put an emphasis on export sales planned to redirect their supplies toward the NOLA DAP barge market, where prices were becoming increasingly favorable.
CF had no barges available for prompt delivery for the balance of November. Mosaic was holding on to any extra barges it had loaded while it evaluated a probable price increase.
As prices marched steadily upward last week, at least one trader expressed fear that a sudden rise could mean an even more drastic fall. However, there were signs that would not happen – at least not soon. Farmers have applied much less fertilizer, especially phosphate and potash, during the past two years, and would find it difficult to continue mining their soil. Due to higher crop prices and decent yields, farmers will have money to spend at the end of this season. The fall season did not begin until later due to wet weather, and prices have been suppressed. Conditions pointed to a stronger market through the balance of the year and into the spring season. Prices being paid for NOLA DAP barges for December and January were above $300/st FOB last week.
Last week, although abbreviated, saw a sharp price rise. Early in the period barges sold for as little as $285/st FOB, which was within the previous week’s range, but by Tuesday, a sale was made at $297/st FOB. Most of the sales conducted last week were at $295/st FOB. As a result, the NOLA DAP barge price range last week was $285-$297/st FOB, which was up from the previous week’s range of $275-$290/st FOB. Expect DAP and MAP prices to rise this week.
As of Nov. 23, DH had the December paper market at $280-$285/st FOB. January-March was $285-$295/st FOB.
Eastern Cornbelt: DAP was pegged at $320-$330/st FOB regional warehouses to the dealer, reflecting another increase from last report. MAP was $10/st higher than DAP. One supplier was referencing forward contract DAP at $335-$350/st FOB in the region for January through April, depending on location and month.
10-34-0 remained at $315-$330/st FOB in the region.
Western Cornbelt: The DAP market was quoted at $315-$325/st FOB in the region, with MAP roughly $10/st higher. MAP pricing out of St. Joseph, Mo., was tagged at the $340/st FOB level last week. One supplier was referencing DAP at $315/st FOB St. Louis, with forward contract tons at the $325/st level for January, $335/st for February, and $340/st for March through May.
The 10-34-0 market remained at $305-$345/st FOB in the region, with the low in Iowa and the upper end reported in Missouri on a spot basis.
Southern Plains: DAP pricing in the region had reportedly firmed from $305-$310/st FOB the previous week to a firm $315-$320/st FOB last week, with MAP $10/st higher. 10-34-0 was pegged at $290-$305/st FOB in the region, depending on location.
South Central: DAP out of regional warehouses was quoted at $310-$325/st FOB and firming, with the low end reported on a spot basis on Monday. MAP was $10/st higher than DAP. The TSP market was pegged at $290-$300/st FOB warehouses to the dealer.
U.S. Export: Last week PhosChem made a sale of 25,000 mt into Africa at $305/mt FOB; delivery will be made in December. Later the same day, PhosChem made a sale of 6,000 mt at $320/mt FOB into Mexico. Still, most vessels being loaded at Tampa will be destined for China in December.
World inventories were down last week, as was the case in the U. S. – and prices will go up in the near future. In addition, some of those involved in export trading were turning their attention to the domestic market, which will help keep the export price higher due to diminished supply.
Inquiries from Central and South America were on the increase last week, and that trend should continue for some time. India was expected to need another 6 million mt of imported DAP next year, and Pakistan was also a leading prospect.
With the most recent sale, the export DAP price range last week rose from $293-$295/mt FOB the previous week to $305-$320/mt FOB. PhosChem was seeking an increased price for its next sale.
As of Nov. 23, the DH paper market had Tampa at $290-$295/mt for December and $285-$300/st FOB for JanuaryMarch.
Pakistan: According to the National Fertilizer Development Centre (NFDC), DAP opening inventories were about 129,000 mt at the start of Rabi season (Oct-March). Domestic production is estimated at 299,000 mt. Thus, the total availability would be 652,000 mt against the estimated demand of about 537,000 mt. Some additional imports are expected by the private sector, however, so the DAP demand/supply situation appears to be comfortable during Rabi 2009-10.
POTASH
Eastern Cornbelt: Potash was pegged at $440-$450/st FOB in the region, reflecting another slight drop from last report.
Western Cornbelt: The dealer market for potash was quoted at $440-$450/st FOB in the region, reflecting another slight drop from last report. There were reports of limited tons moving on a delivered basis for as low as $412/st in the region from one reseller, but it was now clear how widely available that tonnage was.
Southern Plains: Sources put the granular potash market at $450-$460/st FOB regional warehouses, reflecting another drop from last report. The market FOB Carlsbad, N.M., was quoted at $453-$460/st FOB, depending on grade.
South Central: Potash out of regional terminals was pegged at $445-$450/st FOB last week, with several sources speculating that prices have more room to drop.
Southeast: Delivered potash pricing continued to slide, with sources tagging the market at $465-$472/st DEL in the region, depending on grade, location, and supplier.
SULFUR
U.S. Gulf: Martin will load four vessels at its Beaumont facility for export in December, which will remove about 130,000 mt from the system.
However, the prillers were working at about 50 percent capacity or less, although molten sulfur in storage on the Gulf remained relatively high. With phosphate companies likely to avoid additional curtailments due to higher than anticipated export sales and a suddenly robust domestic market, sulfur supplies were expected to tighten during the next few months.
Refineries were said to be running at less than 80 percent of normal capacity, and sweet crude oil was the primary raw material. As a result, less sulfur will be entering the system.
Valero permanently shut down its Delaware City refinery and laid off 550 employees. About a month earlier, Sunoco shut down its Eagle Point refinery, putting about 150 workers out of jobs.
Meanwhile, prices on the world market were still favorable compared to what customers in the U.S. were paying.
West Coast: Turnarounds will begin in California within a month, and those plants could remain offline longer than normal due to market conditions for gasoline, as consumers continued to cut back on driving during the current recession. A prill vessel was expected to load in December.
Vancouver: The price China was paying for sulfur was around $80/mt FOB. However, that did not necessarily translate to higher prices paid at Vancouver, because of higher freight rates.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 54.87 | 57.19 | 27.70 |
| CF Industries | CF | 82.75 | 82.87 | 46.16 |
| Intrepid Potash | IPI | 30.75 | 29.04 | 17.56 |
| Mosaic | MOS | 54.10 | 54.06 | 27.16 |
| PotashCorp | POT | 112.11 | 113.17 | 59.64 |
| Terra Industries | TRA | 39.10 | 38.10 | 13.20 |
| Terra Nitrogen | TNH | 105.13 | 112.90 | 92.15 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 27.64 | 26.59 | 15.29 |
| Deere & Co. | DE | 52.29 | 50.89 | 33.18 |
| Scotts | SMG | 40.60 | 41.16 | 28.35 |
SPOT BARGE PRICES
CF elects three to Terra board; majority of CF shareholders tender into Agrium offer, again
CF Industries Holdings, Inc. (CF) said Nov. 20 that all three of its director nominees were elected to Terra Industries Inc.’s board of directors. Based on a preliminary count by CF’s proxy solicitor, its nominees – John Lilly, David Wilson, and Irving Yoskowitz – were all elected to Terra’s eight-member board of directors by a substantial margin.
“We are pleased that Terra stockholders have voiced their support for CF Industries’ proposed acquisition of Terra by voting for all three of our director nominees,” said CF Chairman, President, and CEO Stephen Wilson. “It is time to move forward and put these two great companies together.”
Terra confirmed that based on preliminary estimates, it appeared that CF’s nominees were elected. Terra issued the following statement:
“While we are disappointed with the outcome of today’s vote, we appreciate the consideration and input from our shareholders.
“During the weeks leading up to the annual meeting, Terra shareholders delivered a consistent message to Terra’s board and management team that CF’s latest proposal substantially undervalues Terra’s robust near- and long-term prospects and that they do not support CF’s proposal on its current terms. Nevertheless, Terra shareholders noted that current trends in the fertilizer market could provide potential consolidation opportunities for many market participants. Terra’s board, as always, will continue to maintain an open-minded approach to considering any bona fide opportunity to create meaningful value for Terra shareholders.
“Terra’s product mix and geographic advantages position us to benefit significantly from an expected upsurge in demand from our agricultural and industrial customer base as the economic recovery continues. In fact, since the beginning of 2009, Terra’s share price has appreciated approximately 130 percent. Terra’s board has a consistent track record of delivering shareholder value, including through the recently declared $750 million special cash dividend that will be paid to all Terra shareholders in December.
“The final results of the election will be announced in the next two weeks following tabulation and certification by IVS Associates, Inc., the independent Inspector of Elections.”
With the three CF nominees now on Terra’s eight member board, CF’s case will definitely be heard. However, whether the other five members can be swayed is still to be seen.
In other merger news last week, Agrium Inc. said Nov. 19 that CF stockholders have tendered approximately 30 million shares, or 62 percent of the total outstanding CF shares, into its offer of $45.00 in cash and one Agrium common share per CF share, as of its expiration at 12:00 midnight, New York City time, Nov. 18. Agrium says the offer is now valued at $101.90 per CF share, or a total consideration of $5.1 billion, based on the Nov. 18 closing of Agrium’s shares.
Agrium urges the CF board to respect a clear stockholder mandate and sign a merger agreement with Agrium. A majority was also tendered last summer, but did not prompt CF’s board to act. The board is not bound by the tender results, and shareholders can withdraw their tenders.
While CF had earlier indicated that a $100 per share offer might get it to the table, one observer this week told Green Markets that that was months ago, and that the $101.90 share value now is simply based on the higher price of Agrium stock.
In the meantime, Agrium has extended its offer until 12:00 midnight, New York City time, Dec. 18, 2009.
Agrium says it also has a clear path to completion of the deal as it has satisfied all regulatory issues in Canada and has signed a proposed consent agreement with the U.S. Federal Trade Commission.
CF issued a statement Nov. 19 regarding Agrium Inc.’s tender offer for all of the outstanding shares of CF: “CF Industries does not believe that the tender results reflect stockholder support for the terms of Agrium’s offer. In fact, CF Industries has heard from its stockholders that there is very little support for the terms of Agrium’s offer. The tender result does not change the fact that Agrium’s offer is far from compelling.”
Dyno Nobel announces plant closures; write-down moves parent IPL into loss column
Dyno Nobel North America (Dyno), Salt Lake City, plans to close ammonium nitrate and nitric acid production at Battle Mountain, Nev., early next year. At Maitland, Ont., the company will also halt ammonium nitrate production early next year, but will continue to produce nitric acid. Both sites will continue as transloading operations. Dyno said the development of transloading operations will ensure that there are no disruptions to customer supply and service.
According to the company, ammonium nitrate and nitric acid capacity at Battle Mountain is approximately 150,000 st/y and 119,000 st/y, respectively. At Maitland, nitric acid capacity is 350,000 st/y and AN is 220,000 st/y. All AN prill has gone into the explosives market. The company said that the Maitland plant produced a very small amount of UAN and 10 percent AN solution for the agricultural market.
Dyno said the Battle Mountain decision was driven by substantially reduced customer demand. The change is effective from the end of January 2010. The transloading operation will employ about a third of the current workforce of 31 people.
Dyno Nobel Vice President, North American Nitrogen Plant Operations Phil Morrow said the decision followed an extensive review of the continued viability of the site. “The review examined the best way to meet customer requirements for quality and service balanced with the economics of supplying a market where demand has reduced substantially.”
Dyno said the Maitland decision was driven by the closure of an Invista facility, a major customer, and the general softening in customer demand. At one point the Invista facility consumed some 40 percent of the plant’s nitric acid production.
The change to the Maitland operation is effective from the end of January 2010. It is expected that the continuing operation will employ about a third of the current workforce of 60 people.
“Manufacturing at the site has been under pressure since Invista ceased operations about six months ago,” said Morrow. “In July, we reduced production from three nitric acid plants and two AN plants to one acid and one AN plant, resulting in a workforce reduction from 101 people to 60 people.”
Dyno Nobel’s owner, Incitec Pivot Ltd. (IPL), Melbourne, said last week that pricing came under pressure in the second half as the North American market became long in AN by around 600,000 st. IPL said a recovery in explosives volumes, and firmer pricing, is largely dependent on the timing of the general recovery of the U.S. economy. IPL is assuming a slow recovery in the U.S. economy from 2011 onwards, and a push back in some benefits from 2010-2011 to 2012.
At both locations, Morrow said the company would call for expressions of interest from employees seeking a voluntary separation. “To transition employees through this difficult time, we will be developing appropriate separation packages including career change and financial counseling.
“Safety is the highest priority,” he said. “We recognize that this will be a difficult time for our employees and we must all be even more vigilant regarding safety. It is important that we watch out for each other to maintain a safe workplace.”
Also last week, IPL moved into the loss column for the year ending Sept. 30, 2009, citing a major write-down involving Dyno Nobel. IPL reported a net loss of A$179.9 million, versus year-ago net profit of A$604 million. The result included material items totaling A$527.7 million after tax, compared with A$42.9 million for the previous year. Excluding these items, IPL booked net profit of A$347.8 million, down 46 percent, primarily reflecting the impact of the fall in fertilizer prices, partly offset by the contribution from the Dyno Nobel explosives business acquired in June 2008.
Some A$490.6 million of IPL’s write-down was for Dyno Nobel goodwill, which is now down to A$2.9 billion. This reflected changes in both the weighted average cost of capital and the current softness in the North American explosives market. IPL said it was important to point out that the writedown does not reflect any change in its view of the mediumterm outlook for explosives. IPL said Dyno Nobel EBIT was US$222 million during the year, up by 27 percent in U.S. dollar terms in the middle of the worst financial market dislocation since 1930. This performance reflects the quality of the explosives business’s market position.
In other news, IPL said there has been no change to the 12-month delay announced in February 2009 regarding its Moranbah ammonium nitrate project in Australia. It expects to have an update on the project in March 2010. Total cost of the Moranbah project is put at A$935 million, with A$340 million already spent.