Phoenix-The impact of airborne nitrogen released from the burning of fossil fuels and widespread use of fertilizers in agriculture is much greater that previously recognized and even extends to remote alpine lakes, according to a study published Nov. 6 in the journal Science. Examining nitrogen deposition in alpine and sub-alpine lakes in Colorado, Sweden, and Norway, James Elser, a limnologist in the school of life sciences at Arizona State University, and his colleagues found that on average nitrogen levels in lakes were elevated, even those isolated from urban and agricultural centers. The article, “Shifts in lake N:P stoichiometry and nutrient limitation driven by atmospheric nitrogen deposition,” presents experimental data from more than 90 lakes. The researchers’ collaboration also revealed that nitrogen-rich air pollution has already altered the lakes’ fundamental ecology. “This is because plant plankton or phytoplankton, like all plants, need nitrogen and phosphorus for growth,” Elser says. “Inputs from pollution in the atmosphere appear to shift the supplies of nitrogen relative to other elements, like phosphorus.” The increase in the availability of nitrogen means that growing phytoplankton in lakes receiving elevated nitrogen deposition are now limited by how much phosphorus they can acquire. Elser says that this is important because “we know that phosphorus-limited phytoplankton are poor food ?Çô basically ‘junk food’ for animal plankton, which in turn are food for fish.” Elster noted that “Such a shift could potentially affect biodiversity. However, we don’t really know, because, unlike in terrestrial systems, the impacts of nitrogen deposition on aquatic systems have not been widely studied.”
All posts by traceybg@gmail.com
Management Briefs
Mid Kansas Cooperative Association (MKC) has named David Spears as chief marketing officer. In his role, Spears will lead the efforts for MKC in the creation, coordination, and management of all sales and marketing. Spears most recently served as director/vice president of operations for Agriculture Solutions Inc., a wholly-owned subsidiary of Kansas Farm Bureau, where he was responsible for the development of programs and services designed to enhance farm and agribusiness income. During the late 1990’s, he served as a commissioner and acting chairman for the Commodity Futures Trading Commission, where he oversaw the commodity futures and options markets in the U.S. Spears graduated cum laude with a Bachelor of Science degree in agricultural economics from Kansas State University.
“We consider ourselves fortunate to bring Dave on board,” said Dave Christiansen, MKC president and CEO. “His wealth of experience working with producers and industry leaders will serve to strengthen our objective of shared growth, shared success.” MKC, headquartered in Moundridge, Kan., is a diverse member-owned cooperative serving producers and customers throughout central Kansas. MKC and its partners provide customers grain marketing, agronomy, energy, and feed inputs.
The Mosaic Co. announced that effective Dec. 1, David Lee, currently director of global feed sales, has accepted the position of director, sales – Western North America on the fertilizer side of the business. He will report to Tom Philbin, vice president, sales – North America. Mosaic said Lee brings excellent international and domestic experience to his new role and will be relocating to Plymouth, Minn., toward the end of the year.
Citing strong sales and overall growth in the company, Trevor Thiessen, president of Novozymes Biologicals BioAg Group, Saskatoon, announced the hiring for four newly-created positions.
Sanford Gleddie has been appointed as global marketing and sales director. Gleddie was most recently the global business development director; previous to that, he was the CEO of Philom Bios Australia. Globally, he will be overseeing Novozymes Biologicals’ six regional business managers, customer communications team, distribution accounts management, and regulatory functions.
Scott Inman has been promoted to the role of agronomy group leader, and is responsible for the global field agronomy team. Inman has been with Novozymes for eight years as a technical sales manager, and more recently as an application specialist for the BioAg division. Prior to joining Novozymes, he served as a technical sales manager and a field development representative with the agriculture industry.
David Fox has been appointed as the new U.S. marketing manager, and is responsible for managing the U.S. marketing initiatives. He will draw on his experience in the marketing of inoculants and seed.
Beth Hatch has joined the company as the new U.S. sales manager, and is responsible for managing U.S. sales initiatives and representatives. She brings more than 12 years of management experience to the team, with extensive experience in marketing management and strategic planning.
Market Watch
AMMONIA
U.S. Gulf/Tampa: To the surprise of many, new NOLA barge business was reported to have concluded last week at $275/st FOB. Sources had expected prices to remain firm or a little lower, but not down some $50/st FOB.
Sources noted that the Tampa price is $355/mt DEL, by comparison. That said, according to Direct Hedge (DH) the Tampa paper market remains down as of Nov. 12, which reflected November-December at $330-$350/mt DEL and January-March at $300-$330/mt DEL.
There was some speculation that there might be a little more ammonia in the Caribbean than expected. Sources say it is a question mark whether the new UAN plant will actually begin producing in Trinidad in November as was earlier expected. As a result, sources say the ammonia plant, which has been producing product in the meantime, will continue to operate, churning out ammonia that was originally expected to go into UAN production. The flip side of this argument is that there have been recent turnarounds and gas outages in Trinidad that might counter-balance this factor.
Eastern Cornbelt: There was some ammonia movement reported in the region last week, but the fertilizer pace remained slow as efforts remained focused on the harvest. One source said phosphate moved earlier on winter wheat ground in his location, but the pace had stalled since late September.
Sources actually reported a drop in cash ammonia pricing last week, with the low reported in the $345-$355/st FOB range in Illinois on a spot basis. There was limited spot business, however, and most sources reported spring prepay pricing in the $425-$435/st FOB range. One supplier was referencing forward contract ammonia at $360-$370/st FOB regional terminals for December, with January-February postings jumping to $430-$440/st FOB.
Western Cornbelt: Another week of good weather allowed growers to move quickly on harvest, and some areas also reported some fall applications of ammonia. “We are moving product,” said one source, who also reported steady applications of phosphates and potash in his trade area.
Anhydrous ammonia remained at $330-$350/st FOB in the region for spot tons, with spring prepay reportedly being offered at levels north of the $400/st FOB mark. One supplier was referencing forward contract ammonia for January through May at $410/st FOB in Nebraska and $430/st FOB terminals in Iowa and Missouri.
California: Calamco moved its anhydrous ammonia price up on Nov. 1 to $430/st truck-DEL in California, with railed product at the $465/st DEL level. Aqua ammonia postings from the company firmed on that date to $119/st FOB. Agrium’s standard grade anhydrous ammonia postings moved on Nov. 6 to $430/st truck-DEL in Central California and $435/st truck-DEL in Northern California.
Pacific Northwest: The dealer market for anhydrous ammonia remained at a nominal $335-$355/st DEL, with the low for railed tons and the upper end reflecting the truck-delivered market.
Western Canada: Favorable weather in early November helped growers make advances on the regional harvest. Sources reported only slight changes to spot fertilizer prices, but there was product moving to the ground in some locations.
The anhydrous ammonia market was quoted at $585-$630/mt FOB regional terminals to the dealer, with the low reported in Manitoba and the upper end in Alberta.
Middle East: Demand from India and East Asia is keeping the producers in this area happy. The market has been operating on a tight basis, with supply just keeping up with demand. Sources now report, however, that things may tighten up a bit more.
Reportedly, two operating lines at Sabic – plants 2 and 3 – are down for maintenance and repair.These two facilities came down just as Sabic IV came back online. To cover the lost production, Sabic is reportedly swapping and buying tons from other area producers. Swapping tons with other producers is commonplace. Traders, however, see the outright purchase of material as an unusual move by a producer.
Even with the tightening situation, sources say the price has not moved off its $305-$310/mt FOB level. Producers are reportedly asking for a modest increase to $310-$315/mt FOB, while buyers are happy to stay where they are. No one is pushing hard one way or another.
A lot will depend, said one Asian trader, on what the U.S. buyers do. If the U.S. comes in strong for more tons, this trader said, the price could move up. Without major U.S. interest, sources expect to see the price remain stationary.
Black Sea: Prices are still not high enough to justify more plants opening in the area. Actually, said one trader, prices have not moved at all.
The Yuzhnyy price remains hovering around $300/mt FOB.
Buyers are bidding in the low $290s/mt FOB and the producers are offering above $310/mt FOB, but neither side is willing to move to the other’s way of thinking.
As with the Middle East, a lot will depend on what happens with demand from the U.S.
As of Nov. 12, DH had the Yuzhnyy paper market at $290-$300/mt FOB for November, $280-$300/mt FOB December, and $270-$290/mt FOB January-March.
Asia: Demand remains strong. The only weak spot is Namhae of South Korea. The fertilizer giant is taking only the minimum required under its contracts.
Other South Korean buyers – along with their Taiwanese counterparts – are not only taking their contracted tons, but are desperately asking for more whenever the supplier can make more available.
The demand is expected to remain strong well into the first quarter of 2010, say sources.
Prices of ammonia to India continue to rise. Qafco has achieved another increase by pricing its cargoes to SPIC, Zuari, and MCFL. Qafco sold at a price of US$331.25/mt CFR including 60 days, with 5,000 mt going to SPIC, 5,350 mt to MCFL, and 5,000 mt to Zuari.
UREA
U.S. Gulf: Granular barge prices continued to work their way up last week. Sources said they began the week at $265/st FOB, and that by Thursday they had gotten as high as $272-$273/st FOB, with quotes of $275/st for the next round of trading.
There appeared to be a lot of worry about low import numbers and whether enough product would come in to meet the spring demand. Sources say prices have to continue to move up to assure that some new cargoes hit the shore. Last week there were reports that Helm had procured a new Egyptian cargo.
As of Nov. 12, DH had the November paper market at $269-$272/st FOB, with December at $275-$278/st FOB, January-March at $282-$285/st FOB, and April-June at $270-$280/st FOB.
Eastern Cornbelt: Granular urea was quoted at $300-$310/st FOB in the region. Some talked of a possible $15/st price increase by the end of the week, but that adjustment was not confirmed.
Western Cornbelt: The granular urea market was pegged at $300-$305/st FOB terminals to the dealer. Some suppliers had also reportedly moved to the $300/st level FOB the Catoosa/Inola market in Oklahoma.
Agrium’s granular urea postings in the Northern Plains market firmed on Nov. 9 to $340/st FOB North Dakota terminals at Alton, Carrington, Colfax, Scranton, and Grand Forks, and $345/st rail-DEL in Minnesota, the Dakotas, and Wisconsin. Those numbers reflected a $20/st increase from the company’s Oct. 29 list prices.
California: Granular urea was pegged at $345-$360/st rail-DEL and $350-$375/st FOB to the dealer.
Pacific Northwest: The granular urea market had reportedly firmed to $340-$360/st DEL in the region. Agrium’s granular urea postings moved on Nov. 9 to $340-$355/st DEL in Montana and Wyoming, depending on location; $360/st FOB Acequia and Pella, Idaho; $365/st DEL in Washington, Idaho, Oregon, and northern Nevada; $375/st DEL in northern and central Utah; and $380/st DEL in southern Utah. Those levels were up $20/st from the company’s Oct. 29 list prices.
Western Canada: Granular urea was quoted at $426-$451/mt DEL in the region, with dealer reference prices as high as $460/mt FOB.
Indonesia: Kaltim closed a tender late last week for 30,000 mt of granular urea and 20,000 mt of prills for December loading.
Initial reports indicate Youngwoo took 20,000 mt and Summit 10,000 mt of the granular urea. Local trader Sakura took 20,000 mt of the prills. All three companies paid $277.50/mt FOB for their awards.
The new price puts granular and prills at parity and just under $10/mt more expensive than the prills sold Nov. 5 by PIM.
Asian sources were not surprised at the price bump for granular. Indonesian granular usually gets a premium over prills. The jump in the prilled price was a bit more surprising.
Sources say Pusri will call another tender soon for 5,000 mt lots. Past tenders have been for a total of 20,000 mt.
Black Sea: Depending on with whom one talks, the Black Sea market is either stable or softening.
Traders are flooding producers with bids below $240/mt FOB – and producers are just as quickly rejecting them.
Sources say, however, that while the November bookings look favorable to the producers, there is little set up for December. Traders are looking to get the price down now for positions that could be used in an expected Indian tender next month. Producers, with the same tender in mind, want to see prices move up.
Ukrainian material is being quoted at $242-$245/mt FOB for early December loadings, but no one is buying at that level. Sources report that paper trades have been done at $242-$243/mt FOB, but no end user has been named.
The trend in the paper trading is not always a good indication where the price will settle once a tender is called. In previous years attempts to move the market with trader-to-trader deals before a major tender backfired, leaving a lot of people with a lot of urea and no place to put it.
Producers are getting a little breathing room, say sources, because the Chinese market is moving up. With higher Chinese prices, sources say Yuzhnyy or Arab Gulf material could look better to the Indian buyers.
Without any new deals on the books and only hopeful prices being pushed by both sides, the market remains stuck in the low $240s/mt FOB.
As of Nov. 12, DH had November paper at $241-$243/mt FOB, December at $242-$244/mt FOB, and January-March at $248-$253/mt FOB.
Middle East: Cargoes are being loaded to fulfill long-term contracts and tender awards for Pakistan. Beyond that, say sources, nothing else is happening in the area.
Prices remain stable in the low $270s/mt FOB for both prills and granular because that was the last price range agreed to in a tender. Contracted tons for buyers in the U.S. are expected to cost less, but those prices are hardly public. The current level is not workable, with reports of barges in the U.S. coming in at $278-$280/st FOB.
One shining spot for area producers is the report that Pakistan and Saudi Arabia have finally signed the paperwork that will – in part – provide US$100 million to Pakistan in a soft loan to purchase urea.
Sabic and TCP still need to work out the details of shipment dates and quantities.
At the current market price, Sabic can be expected to ship 360-370,000 mt.
Sources say only 25,000 mt will be shipped in December. The rest will be stretched out through the first quarter of 2010. These cargoes, along with contracts to other buyers, should ensure the full order books for Sabic well into the first quarter of next year.
The other buyers will use the comfortable Sabic position to argue that their own tons should be sold for much more because of the scarcity of material.
China: The domestic market continues to push Chinese export prices up.
Sources report the latest prices producers have achieved are $268/mt FOB for prills and $275/mt FOB for granular.
At that level, Indian buyers will have to rethink their ceiling price when a tender is finally called.
At its current price, Chinese urea is not competitive into India. More aggressive moves by producers in the Black Sea and Middle East could force the issue, however. At least one trader argues that the price is beginning to soften.
Once Jan. 1 hits, the export duty is slated to jump back to 110 percent from the current 10 percent. Sources say that leaves only December to move material to international buyers.
Reportedly, November cargo possibilities are all booked. The only available tons and port facilities are now booked well into December. Sources add that while some port authorities are more lenient than others, the bottom line for material to qualify for the lower export duty is that it must at least be in the bonded warehouse with a nominated vessel ready to load soon. A stricter reading of the regulations would require the urea to be loaded by midnight Jan. 1.
India: The industry is still waiting for one of the major buyers to call a tender. According to the Indian government, the October-March Rabi season requirements will top out at 700,000 mt if the weather cooperates.
Sources say the most likely time for the tender announcement will come just before the IFA Asia regional meeting Dec. 8.
With prices edging up in China, higher paper trades in Yuzhnyy, and aggressive Middle East producers, sources say the Indian buyer will probably have to settle at prices higher than the last tender. Industry watchers were saying the longer the Indians waited, the more desperate the sellers would become – and thus, the softer the price. That strategy does not appear to be working.
Bangladesh: In order to ensure the urea supply during the coming season, the government has decided to supply additional gas to urea factories by reducing the gas supply in the power plants. The Ministry of Power, Energy and Mineral Resources has decided to supply gas amounting to 250 million cubic feet per day (MMCFD) instead of 200/mmcfd to the urea factories immediately. Chittagong Urea Fertilizer Ltd., which produces one-third of the total amount of urea in the public sector, recently could not go into production due to the low pressure of gas in the plant. The CUFL gets 34/mmcfd of gas against its requirement of 49/mmcfd.
NITROGEN SOLUTIONS
U.S. Gulf: Price ideas continued to move up last week, though sources said the market was hard to gauge as it was difficult to keep up with whether the higher numbers were for prompt or forward. Sources claimed producers had sold out a lot of their product going forward, leaving only trader tons to play in the market. Generally, not everyone was as bullish as producers, with sources pegging business within the $153-$160/st FOB range for prompt. Several said the market was headed to $170/st FOB; others, however, were putting on the brakes.
As of Nov. 12, the DH paper market had November at $160-$165/st FOB, December at $165-$175/st FOB, January-March at $180-$185/st FOB, and April-June at $180-$190/st FOB.
Eastern Cornbelt: UAN prices continued to firm. The prompt market was pegged at $6.25-$6.61/unit FOB regional terminals, with reference levels for UAN-28 reported as high as $191.80/st ($6.85/unit) FOB in Ohio. One supplier was offering forward contract tons for December at $6.60-$6.90/unit FOB regional terminals, with January-April pricing levels ranging from $6.75-$7.45/unit FOB, depending on month and location.
Western Cornbelt: Sources quoted the spot UAN-32 market at $5.94-$6.30/unit FOB regional terminals, up from last report, with more touting the upper end as the week advanced. One source said spring prepay pricing was now approaching the $7.00/unit FOB level from some suppliers.
California: The UAN-32 market was firming. Sources quoted railed tons at $213-$220/st ($6.66-$6.88/unit) in California, with the warehouse number now solidly in the $200-$210/st ($6.25-$6.56/unit) FOB level to the dealer.
Pacific Northwest: Delivered UAN had reportedly firmed to $218-$235/st ($6.81-$7.34/unit) in the region, with the low quoted for railed tons from the Midwest. The railed tons that were coming into the region in October at the $205/st ($6.41/unit) level are no longer available. Inventories were described as low, and one source said he expected the truck market to firm to the $250/st ($7.81/unit) level in the near term.
Western Canada: The UAN-28 market was pegged at $255-$271/mt ($9.11-$9.68/unit) DEL in the region, with reference prices at the $281/mt ($10.04/unit) FOB level from some suppliers.
AMMONIUM NITRATE
U.S. Gulf: While most sources continued to call the market $200-$205/st FOB, some suggested that prices might be on the way up. Others disagreed. The bulls could point to a pricier paper market, where trades have moved up to $200-$215/st FOB for November-December, according to Direct Hedge on Nov. 12.
Western Cornbelt: Ammonium nitrate was steady at $255-$260/st FOB in the region.
California: No market was reported for ammonium nitrate in California. CAN-17 was pegged at $235-$245/st FOB in the state.
Pacific Northwest: Ammonium nitrate was unchanged at $335-$350/st DEL for the last done business, and CAN-17 was pegged at $245-$250/st FOB and $260/st DEL in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was unchanged at $170-$180/st FOB.
Western Cornbelt: Granular ammonium sulfate remained at $170-$180/st FOB or rail-DEL.
California: Ammonium sulfate was down from last report at $210-$247/st FOB, depending on grade and location. Standard grade sulfate FOB Sacramento was pegged at the $220/st level last week.
Pacific Northwest: Ammonium sulfate fill tons were reportedly available at the $178/st DEL level through the end of the week from one regional supplier. Others were reportedly referenced at the $190-$195/st DEL level. Those pricing levels were down considerably from last report.
Western Canada: Granular ammonium sulfate was quoted at $290-$305/mt DEL to the dealer, depending on location, with the low reported on a spot basis in Saskatchewan and Manitoba.
PHOSPHATES
Central Florida: Prompt phosphate sales out of Central Florida continued to be sluggish last week, but production may not need to be curtailed as much as earlier thought. Recent and unexpected sales to China have boosted the need for supplies and have given producers reason to hope.
However, PotashCorp said it planned a two-week turnaround at its Aurora plant at North Carolina, which will cut its current rate of production by about half during the first two weeks of December. The company’s White Springs processing plant at North Florida has been operating only “to meet market demand.”
CF notified its buyers that it suspended the $5/st FOB discount it had been giving to resellers.
Agrifos increased its sales activity last week, as farmers in its service territory were completing harvesting. Dealers were beginning to find sources to fill empty bins. Most of Agrifos’s recent sales were by truck.
With no new prompt DAP or MAP sales by rail found in Central Florida last week, the Central Florida DAP price range remained unchanged at $270-$275/st FOB. Both Mosaic and PCS Sales were charging a $10/st FOB premium for MAP. Agrifos dropped its prices from $300/st FOB for DAP and $305/st FOB for MAP by $10-$15/st FOB for trucks and $5/lt less than trucks for rail shipments.
U.S. Gulf: Now that the upriver has been closed for nearly a month and faces of the phosphate industry had grown longer than the Mississippi, the fall season began last week.
Phosphate was moving out of most warehouses at high gear, and dealers were hitting their suppliers to fill empty bins. At the same time, the number of NOLA DAP and MAP barges was low, and the market began to act as a market once more. As supply diminished and demand increased, so did the price. The short-term prospect was for barge prices to continue to rise, at least for the next few weeks.
The weather was a major factor. Rain eased in most areas, and farmers were hard at work in their fields reaping crops that will bring extremely good prices. Late last week, corn for December was up to $3.94/bushel and $4.42 for December 2010. Soybeans were still bringing about $10/bushel. Farmers will have money to spend for fertilizer and will probably make their move shortly after their crops are secured in order to avoid time lost in the spring, which happened this year.
“The crops represent (farmers’) profits,” a trader said. “They won’t feel comfortable spending money for next year until they know what they have this year.”
However, shortages will likely occur in the upriver areas, which will be able to receive deliveries by rail and truck. Warehouse supplies were running thin in those areas late last week.
Early in the week, NOLA DAP barges were sold for as low as $262/st FOB, but climbed late in the week to as high as $270/st FOB on Wednesday and $275/st FOB a day later.
The NOLA DAP barge price range last week stretched from a flat $262/st FOB to $262-$275/st FOB last week. Mosaic and CF were seeking $275/st FOB. Both were charging a $10/st FOB premium for MAP. Late last week, Mosaic was planning to hike its NOLA DAP barge price, but the amount had not been determined.
As of Nov. 12, the DH paper market was $260-$265/st FOB for November, $250-$260/st FOB December, and $265-$280/st FOB January-March.
Eastern Cornbelt: The DAP market was steady at $305-$315/st FOB in the region, with the upper end quoted in Ohio. MAP was $10/st higher than DAP. 10-34-0 was tagged in a broad range at $310-$330/st FOB, with the upper end again reported in the Ohio market.
Western Cornbelt: DAP was unchanged at $300-$305/st FOB in the region, with MAP 10/st higher. 10-34-0 was steady at $305-$315/st FOB in the region.
California: DAP and MAP were unchanged at $370-$375/st FOB or DEL in California. 16-20-0 remained at $270-$277/st FOB and $270/st rail-DEL, and the 10-34-0 market in California was pegged at $333-$354/st FOB, with the low in the Central Valley and the upper end at desert locations.
Super phosphoric acid (SPA) and merchant grade acid (MGA) were unchanged at $7.40/unit DEL in California, with Simplot referenced at $7.60/unit FOB the warehouse for MGA.
Pacific Northwest: DAP and MAP were steady at $360-$365/st DEL in the region. One source said a fill program was likely from one regional supplier in the near term, but no details were forthcoming last week.
10-34-0 was tagged at $350-$360/st FOB, and 16-20-0 pricing was unchanged at $265-$270/st DEL in the region. Phosphoric acid pricing remained at $7.40/unit DEL in the region for SPA and MGA.
Western Canada: MAP was quoted at $442-$477/mt DEL in the region. The 10-34-0 market was reported at $405-$408/mt DEL in Alberta and Saskatchewan.
U.S.Export: The export phosphate market took off a couple of weeks ago, when China made major moves to shore up its supplies in the north. But unlike the NOLA DAP barge market, prices have not reacted to the up tick in sales. Then, late last week, PhosChem came back into the export market and made a sale of 7,000 mt of DAP into South America at a price of $293/mt FOB.
Last week, Transammonia made another sale of about 40,000 mt on a handymax to China, and Gavilon was said to have also sold a vessel to that country. The total amount purchased by the Chinese during the past three weeks was estimated to be in excess of 450,000 mt. While no prices were released for the new deals, the price was believed to have been about $282/mt FOB, after freight charges, but that could not be confirmed.
PhosChem sold DAP to China earlier, but has held off on any new offers to China due to what it sees as depressed prices and lower margins, which were being affected by both freight rates and higher costs of production for ammonia and sulfur. Agrifos, which had been pursuing the export market in Latin America, pulled back and was reserving its production for the domestic market, due to higher prices.
Mexico was also understood to have made sales to China using handymax vessels, and may have received orders for as much as four boatloads.
Based on sales last week, the export DAP price range moved from $282-$290/mt FOB to $282-$293/mt FOB.
As of Nov. 12, the DH Tampa paper market was $282-$286/mt FOB for November, $280-$285/mt FOB December, and $285-$295/mt FOB January-March.
India: OCP has sold 30-35,000 mt DAP ex Morocco to Tata Chemicals for November, 2009 shipment under a formula price.
RCF has issued a tender for 2 x 18-20,000 mt rock phosphate (grade 29 percent min. P2O5) for shipment during November though January. The tender closed Nov. 9; offers were to remain valid for one month.
POTASH
Eastern Cornbelt: Potash continued to be quoted at $450-$460/st FOB regional warehouses, with rail-delivered potash pegged at the $470/st level in Ohio.
Western Cornbelt: The dealer market for potash remained at $450-$465/st FOB in the region, with the upper end reported in Missouri for white granular tons. One Iowa source pegged the common dealer market at the $455/st FOB level last week.
California: Potassium nitrate was steady at $1,080/st FOB for bulk tons and $1,150/st FOB for bags, and the sulfate of potash (SOP) market was unchanged at $675-$730/st FOB for bulk tons, depending on grade and supplier.
The granular potash market had reportedly dropped to $495/st DEL in the Central Valley, with warehouse postings at the $500/st FOB level in Northern California.
While several sources continued to talk of potash usage cutbacks and ambivalence on the part of dealers and growers to current potash prices, certain producers were citing evidence that growers may be ready to accept pricing levels and begin applying potash again. In a recent conference call with analysts, Bob Jornayvaz, CEO of Intrepid Potash, said growers are putting down fertilizer in areas of the country where weather conditions allow it. “Our farmers in Texas and in California … they’re buying potash and they’re actually putting it on the ground,” he said.
SULFUR
Tampa: Sulfur supplies continued to tighten last week for both the domestic and offshore markets, and spot prices were moving upward.
Although phosphate producers and sulfur suppliers reached a settlement on fourth-quarter contract prices for molten sulfur to Tampa late last month, the cost may likely rise for the first quarter of next year, say sources. A recent spot deal for molten sulfur for a customer in the Southeast was said to have been done at $80/lt DEL, which was far above the $30/lt deal for fourth-quarter contracts. However, it was not clear whether transportation was by rail or vessel.
In the short term, sulfur prices appeared likely to continue to rise into early 2010, but will level out and probably begin to fall later next year as new supplies come online in the Middle East, according to others.
Hurricane Ida, which wound up more as a kind-of-big blow than a major storm in the Gulf of Mexico, did not cause any significant problems for sulfur vessels, and no damage was reported from refineries or sulfur facilities.
Refineries were running at about 80.6 percent, compared to 85-86 percent just a couple of months ago. The economyand reduced driving were major factors in the slowdown.
Prill operations on the Gulf Coast were still running at their normal capacity, but sources said most of the inventory had already been committed.
India: Under FACT’s 25,000mt sulfur tender held Nov. 5, for delivery Nov. 29-Dec. 3, the following offered: Swiss Singapore ex AG/ PG at US$73.10/mt CFR Cochin; Transfert ex AG/PG at US$76/mt CFR Cochin; and Midgulf ex AG/PG US$78/mt CFR Cochin. The previous FACT tender was scrapped due to price increases; however, sources now expect the buyer to confirm the business to the lowest bidder, Swiss Singapore.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 52.84 | 49.81 | 32.01 |
| CF Industries | CF | 80.93 | 79.90 | 52.23 |
| Intrepid Potash | IPI | 26.79 | 27.35 | 15.38 |
| Mosaic | MOS | 49.71 | 49.49 | 29.98 |
| PotashCorp | POT | 102.89 | 95.65 | 69.65 |
| Terra Industries | TRA | 35.20 | 36.00 | 16.34 |
| Terra Nitrogen | TNH | 100.40 | 101.71 | 92.70 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 24.03 | 25.37 | 18.59 |
| Deere & Co. | DE | 47.41 | 48.11 | 32.73 |
| Scotts | SMG | 41.91 | 42.97 | 27.00 |
SPOT BARGE PRICES
Merger attempts intensify as Terra meeting nears; Agrium, CF make better offers, get more rejections
The ongoing merger saga of Agrium Inc., CF Industries Holdings Inc., and Terra Industries Inc. intensified last week as Terra shareholders move closer to a Nov. 20 meeting date in which CF will try to elect three members to the Terra board.
CF started the week off on Nov. 1 by offering to acquire Terra for $32.00 in cash and 0.1034 of a share of CF common stock for each Terra share (including the $7.50 per share special dividend declared by Terra). CF said the offer has a value of $40.61 per share, based on the Oct. 30 closing price for CF common stock. The offer, which is equivalent to a multiple of 7.1 times trailing 12-month EBITDA, represents a premium of 28 percent to Terra’s closing price on Oct. 30 and a significantly higher premium to the price at which Terra shares would have traded without takeover speculation. Morgan Stanley committed $2.5 billion to provide the funds required for the transaction. The transaction is not subject to a financing condition or to the approval of CF Industries stockholders.
CF changed tactics by offering the bulk of its offer in cash versus the previous offer of stock. Overall, the result appeared to be an approximate $1.90 increase in price per share. “The substantial cash in our offer makes the combination far more accretive for CF Industries stockholders, while providing certainty on value and closing for Terra stockholders,” said Stephen Wilson, CF chairman, president, and CEO. “The transaction is clearly in the best interests of our respective stockholders.”
On Nov. 4, Terra said its board unanimously rejected the new offer, saying it significantly undervalues Terra’s near-term and long-term prospects. “CF’s latest proposal fails to appropriately value Terra’s world class assets, strategic advantages and prospects,” said Terra President and CEO Michael Bennett. “Terra is a preeminent pure play nitrogen company, and through the continued execution of our strategy is well positioned to take advantage of an upsurge in demand from our agricultural and industrial customer base as the economic recovery continues.”
Still, Terra left the door open to another offer. “Terra’s board has a proven record of building Terra’s market position and delivering shareholder value,” said Henry Slack, Terra board chairman. “Terra’s board and management team always have and will continue to remain open to considering any bona fide opportunity to create meaningful value for Terra shareholders.”
CF responded to the Terra rejection by saying it has made a full, fair, and compelling offer that provides Terra stockholders with certainty of value and closing. CF said it is confident that Terra stockholders will show their support for its offer by voting for CF’s nominees at Terra’s annual meeting.
Not to be outdone, on Nov. 5 Agrium Inc. increased its exchange offer to acquire all of the outstanding shares of CF to $92.99 per CF share based on Agrium’s closing stock price on Nov. 4, 2009. CF stockholders would receive $45.00 in cash, an increase of $5.00, or 12.5 percent, and one common share of Agrium for each CF share.
Agrium says the offer provides a premium of over 67 percent to CF’s closing price on Feb. 24, 2009 – the day before Agrium announced its initial proposal – and about 84 percent to CF’s 30-day volume weighted average price through that date. Agrium says the offer represents a compelling multiple based on CF’s 2010 “owned” EBITDA, particularly in relation to CF’s historical trading multiples, and that this is its best and final offer.
Agrium has extended the expiration date of the exchange offer until midnight, New York City time, on Nov. 18, 2009, just two days before the Terra annual meeting.
Agrium says it has entered into a consent agreement with the Canadian Competition Bureau and has received a “no action” letter from the Bureau. Under the agreement, Agrium will sell 50 percent of its Carseland, Alberta, plant to Terra and also supply a minimum of 60,000 mt of urea per year to Terra for five years. Agrium says it has satisfied regulatory hurdles in Canada and expects to complete the resolution of regulatory issues in the U.S. shortly.
On Nov. 6, CF rejected Agrium’s latest offer, saying it continues to substantially undervalue the company. “Agrium’s latest revised offer is very far from compelling,” said CF’s Stephen Wilson. “Our board and management team are committed to delivering superior value to our stockholders. We have a long history of generating value for our stockholders and we will continue to execute our long-term strategy, including the company’s offer to acquire Terra Industries.”
Agrium 3Q net income off 93 percent; expects excellent year in 2010
Agrium Inc. reported that third-quarter net income was off 93 percent, to $26 million ($.16 per diluted share) on sales of $1.89 billion, versus the year-ago $367 million ($2.31 per share) and $3.18 billion, respectively. This was in line with earlier estimates (GM Oct. 26, p. 10). The results included an inventory write-down of $9 million, primarily associated with Wholesale purchase for resale business.
Nine-month net income was $336 million ($2.13 per share) on sales of $7.83 billion, versus the year-ago $1.2 billion ($7.54 per share) and $8.3 billion.
Agrium estimates that North American fertilizer demand in the last fertilizer year declined 5-10 percent for nitrogen, 25-30 percent for phosphate, and 40-50 percent for potash. It expects nutrient demand at the farm level to rebound in late 2009/early 2010 to show increases of at least 5 percent in nitrogen, 20-25 percent in phosphate, and 30-35 percent in potash.
“We do not believe that farmers will put crop yields at risk two years in a row given the cumulative impact this could have,” Agrium President and CEO Mike Wilson told analysts. “If fall weather reduces fertilizer application to below normal levels, 2010 spring application is expected to be exceptional. And we believe the fundamentals are set for 2010 to be an excellent year overall for our agricultural products and services.” Wilson said if you look at everything playing out, he does not see why it will not be a “knock-your-socks-off spring.”
As for the pivotal Chinese potash contract, Wilson said that while he hopes it will settle by the end of the year, it is traditional for them to settle at the last minute. “So we do not see it happening until getting into the first quarter.” For the first nine months, Agrium potash sales were off almost 1 million mt, to 410,000 mt from the year-ago 1.4 million mt.
Third-quarter Wholesale net earnings were down, to $83 million on sales of $658 million, versus the year-ago $412 million and $1.6 billion. Nine-month earnings were $355 million on sales of $2.3 billion, versus the year-ago $1.37 billion and $3.7 billion.
Third-quarter Retail net earnings were $31 million on sales of $1.23 billion, versus the year-ago $121 million and $1.6 billion. Nine-month net income was $220 million on sales of $5.4 billion, versus the year-ago $534 million and $4.5 billion.
Advanced Technology showed no third-quarter net earnings versus the year-ago $10 million. Sales sank to $60 million from $90 million. Nine-month net earnings were $9 million on sales of $209 million, versus the year-ago $27 million and $276 million.
Agrium is providing guidance for the second half 2009 of $.30 to $.60 per diluted share.
| Wholesale | Q3-09 Vol. | Q3-09 Price | Q3-08 Vol. | Q3-08 Price |
| N | 919 | 283 | 838 | 594 |
| P | 310 | 368 | 240 | 1,321 |
| K | 273 | 399 | 380 | 655 |
| YTD-09 | YTD-09 | YTD-08 | YTD-08 | |
| N | 2,836 | 336 | 2,860 | 510 |
| P | 772 | 447 | 769 | 902 |
| K | 410 | 483 | 1,403 | 445 |
CVR 3Q nitrogen income off 108 percent, reports big turnaround in UAN prices
CVR Energy Inc. reported a 108 percent drop in nitrogen operating results for the third quarter ending Sept. 30, 2009, to an operating loss of $3.9 million on sales of $45.9 million, versus the year-ago operating income of $46.5 million and sales of $74.2 million. For the third quarter, average plant sale prices for ammonia and UAN were $247/st and $133/st, respectively, compared to the year-ago $685/st and $324/st.
Nine-month nitrogen operating income was $41.9 million on sales of $169 million, down from the year-ago $95.6 million and $195.6 million.
“Besides lower commodity prices that affected our industries, the company was particularly impacted by unexpected production interruptions at the refinery during the third quarter, especially problems involving our Fluid Catalytic Cracking Unit and our Continuous Catalytic Reformer,” said CEO Jack Lipinski. “This lost production and related maintenance costs resulted in operating income being reduced by an estimated $19 million for the quarter.” The company said without these interruptions and maintenance costs, results should have been near breakeven. Some of the maintenance was slated for a 2011 turnaround, so CVR said it gets a two-year benefit from doing it now.
Third-quarter on stream factors remained high for gasification, ammonia, and UAN. Petroleum coke feedstock prices were down for the third quarter, to an average of $24/st compared to the year-ago $32/st. Year-to-date prices were about level, at $30/st versus the year-ago $31/st. CVR said its UAN sales book has 200,000 st stretching into next year. It said it has sold prepaid product netting back to $180/st FOB.
Lipinski told analysts that nitrogen fertilizer prices bottomed in June when the company was taking UAN orders in the low $120s/st. He said the company took a substantial number of orders in the week of Oct. 26 in the high $160s/st FOB. On capital expenses, CVR expects to spend $16 million in 2009 and $15 million in 2010, which includes $4 million for a fertilizer plant turnaround.
Company-wide, CVR reported a net loss of $13.4 million ($.16 per diluted share) on sales of $811.7 million, versus the year-ago net income of $99.7 million ($1.16 per share) and $1.58 billion. Nine-month net income was $59.9 million ($.69 per share) on sales of $2.2 billion, versus the year-ago $152.9 million ($1.77 per share) and $4.3 billion.
The petroleum division had a third-quarter operating loss of $300,000 on sales of $766.4 million, versus the year-ago income of $20.2 million and $1.5 billion. Nine-month petroleum operating income was $161.2 million on sales of $2.05 billion, versus the year-ago $185.7 million and $4.12 billion.
| Sales (000 st) | 3Q-09 | 3Q-08 | YTD-09 | YTD-08 |
| Ammonia | 50.1 | 21.9 | 125.5 | 65.2 |
| UAN | 204.1 | 165.4 | 508.9 | 462.0 |
| Total | 254.2 | 187.3 | 634.4 | 527.2 |
| Product Pricing (plant gate $/st) | ||||
| Ammonia | 247 | 685 | 318 | 568 |
| UAN | 133 | 324 | 221 | 296 |
Supporters say Monsanto mine only alternative to Chinese competition
Writing in support of Monsanto’s proposed Blackfoot Bridge phosphate mine in Southeast Idaho, two Idaho Council on Industry & Environment (ICIE) officials warned that if the project is not approved, the United States could become dependent on China for its elemental phosphorus – and the environment would suffer.
On Aug. 10, the U.S. Bureau of Land Management (BLM) released its Draft Environmental Impact Statement for the Blackfoot Bridge Mine, which Monsanto officials say would be one of the most environmentally advanced mines in North America once it opens. It is tentatively scheduled to open by 2011.
The mine’s three open pits would replace a million tons of annual phosphate ore that now comes from the South Rasmussen Ridge Mine in Caribou County, which could be exhausted by 2013. The Blackfoot Bridge ore is projected to last for 15 years. Monsanto hopes to start developing that mine in the second half of 2010.
In an Oct. 26 letter to the BLM project manager overseeing the Blackfoot Bridge Mine’s EIS, Patricia Barclay and Norm Semanko noted that elemental phosphorus is a key ingredient in the production of glyphosate herbicides.
Barclay is Boise-based ICIE’S executive director; Semanko, its environment/regulatory affairs committee chairman. The nearly 90-member ICIE was formed in 1989 to encourage the use of sound science and facts in shaping environmental policies. Members include the Idaho Mining Association, Idaho Power, the J.R. Simplot Co., and Monsanto.
Following the shutdown of FMC Corp.’s elemental phosphorus plant near Pocatello in December 2001, Monsanto’s three-furnace P4 Production LLC plant near Soda Springs is the only elemental phosphorus plant still operating in the Western Hemisphere. It provides the elemental phosphorus used in Monsanto’s popular Roundup, a glyphosphate weed killer.
When Monsanto’s Roundup patent expired in 2000, a massive rise in glyphosate production in China was sparked at factories in the Yangtze River delta, Sichuan province in the southwest, and Ningxia in the north, according to the Australian News Service.
“The indirect environmental and socio-economic consequences of alternatives for minimizing environmental impacts of mining at the Blackfoot Bridge Mine should be explicitly delineated in the final Environmental Impact Statement,” Barclary and Semanko wrote.
In its preferred alternative, BLM proposes best practices already used, including mine pit backfills, original terrain contouring, and store-and-release vegetated cover systems. It also proposes unprecedented new technologies such as a laminated geosynthetic clay liner and a massive water management system to encircle, capture, and store water around the mine.
The ICIE officials cited a January 2009 U.S. Geological Survey report that showed while the U.S. remained the leading exporter of diammonium phosphate and monoammonium phosphate fertilizers, China was the leading producer of DAP, MAP, phosphate rock, and phosphoric acid in 2008. China raised its export tariffs on phosphate rock and fertilizer products to ensure domestic requirements.
“According to that report, China clearly has the reserves and capacity to produce phosphate rock. As the only country with both major phosphate reserves and existing glyphosphate production facilities, should Blackfoot Bridge Mine not be developed, or even should it be delayed, the worldwide demand for glyphosphate will shift to China,” Barclay and Semanko said.
Time magazine and The New York Times published articles criticizing China’s disastrous environmental policies and standards, they pointed out.
The World Bank and State Environmental Policy Agency concluded in a study that up to 400,000 premature deaths can be blamed on China’s air pollution. The Council on Foreign Relations also reports: “China’s environmental woes are mounting, and the country is fast becoming one of the leading polluters in the world.”
Most Chinese fertilizer companies show inadequate environmental performance due to weak enforcement of regulations, Barclay and Semanko stressed.
“Action that prices phosphate production out of the United States would do more than move mining overseas. In the case of the Blackfoot Bridge Mine, the mine directly supports a processing and loading facility that ships elemental phosphorus throughout the Western Hemisphere,” they wrote.
“Here again, there are significant differences in how U.S. and Chinese phosphorus manufacturers affect the quality of the environment.”
China typically ships its phosphorus in 55-gallon drums, violating ISO packing and transportation guidelines, which require it be shipped in specialized, double-hulled containers such as those loaded in Soda Springs because phosphorus can spontaneously ignite on contact with oxygen.
Monsanto’s plant at Soda Springs complies with international quality management and environmental management standards as well as national worker safety standards, but the 14 Chinese companies that export elemental phosphorus fail to meet any of those certification standards, Barclay and Semanko wrote.
Intrepid Potash 3Q net income off 81 percent
Denver-Intrepid Potash Inc. reported an 81 percent drop in net income for the third quarter ending Sept. 30, 2009, to $9.5 million ($.13 per diluted share) on sales of $66.4 million, compared to the year-ago $49.7 million ($.66 per share) and $146.2 million. Third-quarter potash sales were 111,000 st with an average net sales price of $458/st, versus the year-ago 204,000 st and $623/st. Langbeinite/Trio sales were 40,000 st with an average price of $246/st, versus the year-ago 50,000 st and $283/st. “The third quarter began to show some signs of a moderate recovery in the domestic potash market,” said Bob Jornayvaz, Intrepid CEO. “Although the potash market in the United States remains a just-in-time market, our forward warehousing efforts have provided Intrepid the opportunity to participate in sales that we would have otherwise not realized.” Intrepid said it believes the domestic potash market is in the bottoming process and has begun to see more initial hopeful signs, with selective buyers returning to the market as dealer-owned inventories appear to be at low levels. Nine-month net income was $48.6 million ($.65 per share) on sales of $228.7 million, versus the year-ago $101.4 million ($1.35 per share) and $335.8 million. Nine-month potash sales were 290,000 st with an average price of $610/st, versus the year-ago 630,000 st and $445/st. Nine-month Trio volumes were 123,000 st with an average price of $306/st, versus the year-ago 191,000 st and $181/st.