Boston-Converted Organics Inc. has teamed up with the IESI division of IESI-BFC Ltd. to convert food wastes into organic fertilizer. IESI-BFC is one of North America’s largest full-service waste management companies, operating in five Canadian provinces and ten U.S. states. “IESI has a very impressive roster of clients, and a well-regarded reputation in the waste hauling industry,” said Jack Walsdorf, vice president of waste management for Converted Organics. “Incorporating IESI into our extensive waste hauling network provides Converted Organics with another source of high-quality organic waste for the manufacture of our all-natural organic fertilizers.” At the same time, Converted Organics reported that it is continuing to receive re-orders for its organic granular and liquid fertilizer products, in particular from cranberry growers in the northeast. “We continue to receive feedback from cranberry growers about Converted Organics’ all-natural, organic fertilizers’ positive impact on cranberry growth in Massachusetts, one of the largest cranberry-producing states in the country,” commented Edward Gildeas, company president. “We are pleased that our products continue to contribute to cranberry growers’ success and remain an important part of their production strategy.” One grower from East Freetown, Mass., noted that 2010 will be his third year using the company’s Liquid Concentrate 1-1-1, which he credits for better growth, higher yields, and a reduction in berry rot. Converted Organics subjects biodegradable food wastes to a proprietary high-temperature liquid composting that produces dry pellet and liquid concentrate organic fertilizers for retail, professional turf management, and agribusiness markets.
All posts by traceybg@gmail.com
TFI clarifies chem security response
Washington–Green Markets incorrectly reported in the Oct. 26 issue that The Fertilizer Institute (TFI) had joined the Agricultural Retailers Association (ARA) and the American Farm Bureau Federation (Farm Bureau) in sending letters to The House Energy and Commerce Committee in support of an amendment to the Chemical Facility Anti-Terrorism Act of 2009 (HR 2868). The amendment, offered by Reps. Mike Ross (D-Ark.) and Zack Space (D-Ohio) and approved by voice vote before the committee’s 29-18 vote in favor of HR 2868, would require DHS to conduct an economic assessment regarding the impact an Inherently Safer Technologies (IST) requirement would have on agricultural facilities covered by the proposed security regulations. While ARA and the Farm Bureau did send letters in support of the amendment, TFI said the benefits of the amendment do not override the overall harm imposed by the bill. “TFI’s members believe that the security legislation passed by the House Energy and Commerce Committee last week could so negatively impact our members and the agriculture community that we can’t offer words of support for anything short of removing inherently safer technologies or a ‘no’ vote,” TFI told Green Markets. The IST provision, along with other language in the bill, remains a deal-breaker for ARA and numerous other industry trade groups as well. “Unfortunately, we are still unable to find common ground with the committee on the right approach regarding the regulation of process changes and product substitutions,” said the American Chemistry Council in a recent statement. “While we appreciate the committee’s willingness to consider our input regarding this complex aspect of the legislation it remains the primary reason ACC is unable to endorse the bill. Our members are concerned that providing government with authority to direct process changes or product substitutions could result in making critical products unavailable throughout our economy, with potentially significant impact on our companies and our customers.” Anhydrous ammonia and ammonium nitrate are cited as the fertilizer products most vulnerable to an IST provision. HR 2868 is now destined for the full House after slight differences are ironed out between the Energy and Commerce Committee’s version of the bill and an earlier version approved by the House Homeland Security Committee in June (GM June 29, p. 1).The legislation is expected to be on the House floor before the end of 2009, after which the Senate will take up the issue.
Menefee fined $100K for air violations
Santa Fe-The New Mexico Environment Department and Menefee Mining Corp. have agreed to a $100,000 fine for Menefee’s violation of the state air quality act by operating without a required permit. Menefee mines and produces humate plant fertilizer near Cuba, N.M. “A lawsuit was filed in state district court in 2008 to require Menefee to apply for a permit,” stated Environment Department Secretary Ron Curry, “but the company ignored state laws which are intended to protect residents and the environment from the effects of excessive pollution.” Menefee Mining and its exclusive distributor, Earthgreen Products Inc. in Dallas, Texas, were founded by John Lown, who has been involved with and funded extensive research and product development of humates and humic substances since 1990. The humate products are distributed nationally and internationally and are approved for organic growing.
Management Briefs
CHS Inc. has named Josh Blaisdell to the newly created position of vice president, corporate compliance. “At CHS, stewardship is one of our core values. That means not only giving back our time, talents and resources, but making certain we operate all of our businesses with the utmost commitment to the environment, health and safety; and in compliance with the laws and regulations under which CHS operates,” said John Johnson, CHS president and chief executive officer. “This new position consolidates our current efforts under a single leader who can take our solid record of performance to new levels.”
Blaisdell will lead overall CHS domestic and international compliance and audit programs, heading a team that includes CHS environmental, health and safety, business continuity/disaster recovery, and internal audit functions. He will be responsible for corporate compliance and results, including government rules/regulations and development of company policies and procedures, as well as implementation and maintenance of state-of-the-art compliance programs, policies, and procedures. In addition, his team will be responsible for audit, training, and related activities that promote legal and ethical conduct. Blaisdell will report to David Kastelic, senior vice president of the new CHS legal and compliance department, effective Jan. 1, 2010.
Blaisdell joined CHS in 1990 and has served as tax director since 1995, with responsibility for all domestic and international tax-related matters. He also led the implementation of the CHS company-wide Sarbanes-Oxley compliance program, and had responsibility for its ongoing management. Blaisdell previously worked for Dyco Petroleum, Minneapolis, served as a tax accountant, and was a commissioned officer in the U.S. Army. He holds a juris doctor degree from the University of Idaho, and a Bachelor of Science degree in accounting from the University of North Dakota. He is an active member of the National Society of Accountants for Cooperatives and the Legal, Tax and Accounting Committee of the National Council of Farmer Cooperatives.
The Andersons Inc. has named Nicholas Conrad as vice president, finance & treasurer, effective Nov. 1. He fills a position vacated by Gary Smith, who is retiring after 29 years with the company. In his new role, Conrad will oversee the corporate functions of finance, treasury, investor relations, credit, and insurance. An employee of The Andersons since 1984, Conrad has most recently served as the assistant treasurer. He has also served as cash manager and credit manager. Conrad served with two financial institutions for eight years before joining the company. He has an MBA from the University of Michigan, Ann Arbor, and a Master of Arts degree in English from The University of Toledo, where he also earned his bachelor’s degree in English. In 2006, Conrad attended the Stanford Graduate School of Business Executive Program.
The Andersons Inc. has named John Stout Jr. to the company’s board of directors, bringing board membership up to 10 members. Stout currently serves as the CEO of Plaza Belmont Management Group LLC, a private equity firm specializing in the acquisition of food manufacturing companies, a position he has held since founding the company in 1998. Between 1984 and 1990, he was executive vice president of Dixie Portland Flour Mills Inc., Memphis, Tenn. In 1990, Stout helped form a group of investors who purchased Diana Fruit Co. in Santa Clara, Calif., from Tyson Foods, Inc., and he continues to be involved in the ownership of that company. From 1991 to 1998 he served as president of Manildra Milling Corp. and Manildra Energy Corp., located in Shawnee Mission, Kansas. For the past six years, Stout has served on the Economic Advisory Council of the District Ten Federal Reserve Bank. He is active within the food industry, having served as chairman of the International Wheat Gluten Association, the Wheat Quality Council, the Allied Trades of the Baking Industry, and the Young Baking Industry Executives of the ABA. Currently, Stout serves on the boards of directors of Diana Fruit Co., Mennel Milling Co., Packaging Products Corporation, MaMa Rosa’s Pizza, and Casa de Oro Foods. He holds a bachelor of business administration degree from Emory University.
Viterra Inc. President and CEO Mayo Schmidt has been named Chief Executive of the Year by Canadian Business Magazine. Candidates for the award are evaluated based on specific performance metrics, including annualized shareholder return, annual growth rate, and corporate net income. “Since his arrival at Viterra in 2000, Mayo has shown extraordinary vision and leadership,” said Thomas Birks, Viterra’s board chair. “His strategic and disciplined approach has positioned Viterra as a leader in shaping the future of agriculture and expanding Viterra’s reach in North America and around the world.”
Earlier this year, Schmidt led the successful acquisition of ABB Grain Ltd. of Australia, establishing an international presence for Viterra as a premium quality ingredients supplier to leading global food manufacturers. In 2007 he spearheaded the successful acquisition of Agricore United by Saskatchewan Wheat Pool, creating Canada’s largest agribusiness.
Market Watch
AMMONIA
U.S. Gulf/Tampa: The Tampa import market remains at $355/mt DEL. Nothing new has been reported on the NOLA barge market for some time.
Eastern Cornbelt: October 2009 was turning out to be one of the wettest on record for the region, and harvest delays were getting critical. Fall fertilizer movement also remained stalled in the region.
Spot ammonia pricing was quoted at $335-$360/st FOB in the region, but “no one is asking,” according to one source. Forward pricing for spring was reported as high as $430-$435/st FOB, depending on location.
Western Cornbelt: More precipitation hit the region at midweek, compounding harvest delays and prompting flood warnings for some locations. “All fertilizer movement looks remote at this point,” said one dealer. “You hate to be negative, but that’s how it looks.” He noted as well that little fall winter wheat was seeded in his location because of the wet conditions and late harvest.
Anhydrous ammonia remained at $320-$350/st FOB in the region, with no movement and no new sales to test the market. Delivered ammonia was pegged at $350-$360/st in Missouri from southern production points.
Northern Plains: Most of the region remained wet last week, although several locations saw some harvest activity early in the week. With little activity to test the spot market, sources reported few changes to fertilizer prices. Delivered ammonia remained at $375-$380/st in North Dakota, with spot tons reported at the $350/st FOB level out of regional terminals.
Middle East: Producers continue to ask $350/mt FOB ?Çô and buyers keep turning them down.
The latest indication of settled prices came when FACT/India awarded Qafco and PIC awards for end-November and early-December cargoes. Qafco got the November award at $340/mt CFR and PIC the December cargo at $345/mt CFR.
Asian sources peg the netbacks for the deals at $305-$315/mt FOB.
For the past month or so, demand for product from the area has been strong enough that producers could easily raise their prices with each new cargo. Now, however, sources say demand from India appears to be evening out.
Weather conditions in India have begun to slow down demand for DAP. In turn, Indian producers need less ammonia.
So far, say sources, the softening is not enough to lower prices, but it is enough to put a halt to buyers being willing to take tons at almost any price. There is now more resistance to the higher prices offered by the producers.
One source said higher prices could easily play against the producers. If the price gets too high, some of the closed Ukrainian plants might come back online. Should that happen, the large influx of ammonia could easily crater prices again.
One observer noted that producers are walking the fine line of trying to wring out as much money as possible from each buyer while holding the price low enough to keep many of the Black Sea plants closed.
Black Sea: After the run-up late last month, sources say the price has once again stabilized in the upper $290s/mt FOB.
Sources say people will be watching the U.S. application demand as an indication of which way the price will move.
Another area people are watching is the Middle East. Increased prices in that market could have a rollover effect on the Yuzhnyy market, said one trader. If the price from the Middle East gets too high, sources say it might become feasible for some of the closed plants in the Black Sea area to re-open.
To stay open, however, sources say the price from Yuzhnyy has to hold at $320/mt FOB or above.
If more plants open, said one trader, the price could easily crash with the influx of extra tons.
Asia: Taiwan and South Korea continue to buy as many tons of ammonia as their suppliers can ship.
One source described the situation as well balanced. Production in Southeast Asia, along with material from other sources, is just enough to keep up with demand. Any disruption in the regional output, said one trader, would be enough to send the buyer scrambling to get a cargo at almost any price.
The main suppliers into the area, KPI and KPA of Indonesia, are operating at full capacity. There are reports that at least one of the plants will soon take a routine turnaround.
UREA
U.S. Gulf: Most players last week said granular urea barges have rebounded. While several put the market within the $255-$258/st FOB range, others said business was still concluded as low as $250/st FOB.
Eastern Cornbelt: Granular urea remained at $295-$305/st FOB in the region. One source reported some interest in urea and UAN for spring, but most attention was focused on the late harvest.
Western Cornbelt: The granular urea market continued to be quoted at $295-$305/st FOB terminals to the dealer, depending on location. Koch’s reference levels moved on Oct. 30 to $285/st FOB Inola, Okla., and $290/st FOB Enid.
Northern Plains: Granular urea was pegged at $310/st DEL in North Dakota and $305/st FOB the Twin Cities and Carrington, N.D.
Northeast: Wet conditions continued to slow the harvest pace across the Northeast region. Sources reported minimal interest in fertilizer pricing. “Growers are focused on harvest, so there’s not a big enthusiasm for talking about next year,” said one. Buyers remain extremely cautious at both the wholesale and retail levels. “There’s no sense in buying anything if you don’t need it tomorrow,” commented one source. Others, however, were expressing concern about logistics next spring due to the current hesitancy. “Come January forward to April, you just can’t get the volume of product moved to the marketplace,” said one source.
The UAN market was up slightly from last report. Sources pegged the Baltimore market at $5.34-$5.47/unit FOB, while UAN-32 pricing out of terminals in upstate New York had reportedly firmed to $200-$208/st ($6.25-$6.50/unit) FOB. Sources said the dealer price would firm to the upper end of that range on Nov. 1.
Eastern Canada: Fertilizer activity remained on the back-burner in Eastern Canada due to a late harvest, uncooperative weather, and reductions in winter wheat acreage.
The granular urea market remained at $415-$450/mt FOB in the region, depending on location and supplier, with the upper end representing the common dealer reference level.
Pakistan: After TCP finished its purchase of 600,000 mt in nine tenders, the company scrapped two additional tenders that were slated for Oct. 24 and 27.
In addition to picking up the tonnage the country needed on order by the end of October, Pakistan will also get $100 million worth of urea from Saudi Arabia.
At the current Middle East market price of $270-$275/mt FOB, Pakistan would receive 364-370,000 mt of urea. Sources point out, however, that the tonnage will most likely not start shipping until December or January. At that time, one trader noted, the price will most likely be much softer.
Media reports in Pakistan cite government sources in claiming that Pakistan will need an additional 300-400,000 mt of urea to start the spring application. Sources say the Saudi deal is most likely designed to cover that need.
Saudi Arabia has given Pakistan similar soft loans in the past. This current package has been talked about for more than three months.
The Saudis rejected an earlier request by the Pakistan government for $400 million in aid.
Previous packages have ranged from $130 million to $240 million.
Sources say the Saudi loan will provide enough money to ensure a strong supply of material for the opening of the main 2010 application season.
The tons purchased under this program, combined with increased domestic production, should ensure Pakistan will not have to re-enter the international market next year. Government sources told local media that upgrades to existing plants and new facilities will make Pakistan self-reliant in urea next year.
Area observers question whether full self-sufficiency will be achieved in 2010, but they do say the recent tenders and the Saudi aid package should keep TCP out of the global urea market.
India: As November starts, so do the annual rumors of an Indian urea tender.
Sources in Asia say buying agents from India are reportedly making the rounds. No one could confirm the nature of any talks, but reports are circulating that a tender could be called as early as Nov. 15.
A number of traders say India will need material shipped in December and early January. With that time schedule – and reports that China is sold out for the first three weeks of November – sources say the most likely time for a tender will be by Nov. 15 at the earliest, and most likely during the last week of the month.
A delay until the end of November would give the market a chance to cool off following the large purchases by STC and Pakistan.
A late-November or early-December loading time will ensure Chinese material will be a large part of offers made in any tender at that time. Even though the Chinese price is edging up, sources say offers from China could easily beat Middle East and Yuzhnyy offers.
China: Sources report that now that the export duty has dropped to 10 percent, the industry should expect to see lots of urea flowing out of the country – particularly to India.
Domestic prices remain firmly in the mid $250s/mt FOB, but domestic demand appears to be growing. Producers are now asking $265/mt FOB for late-November export loadings. And sources say that price might just be achieved.
Helping push up the Chinese prices are reports that demand from the U.S. and Latin America is making producers look to raising prices for exports.
Black Sea: Everyone seems to be taking a deep breath now that the Pakistan series of tenders are over, and Indian buyers are thinking about their next move.
The line-up in Yuzhnyy to cover Indian and Pakistani business is strong. Sources say the loadings are proceeding without any major difficulties.
After watching the netback price move steadily up, with producers now saying they will not discuss any price under $245/mt FOB, sources say the market is stagnant in the low $240s/mt FOB.
Despite all the talk of $245/mt FOB material, sources say the only deals at that level have been top-off tons. One trader said nothing has been done to indicate that the large-scale market has moved up to or beyond $245/mt FOB.
For now, sources say the market remains at $240-$245/mt FOB.
Middle East: The Saudi-Pakistan aid package will ensure that Sabic will not have to go looking for buyers into the first quarter of 2010.
Sabic already has a number of large-scale contracts with American and other buyers. Sources say that if you add to those sales the 364-370,000 mt of material Pakistan will take under the aid package, Sabic is sitting pretty.
Sources report most producers are in good shape for the first half of November. After Nov. 15, however, observers say Middle East tons will be competing with Chinese tons for spot and contract business.
Producers will tell anyone who will listen that bids need to start at $280/mt FOB for consideration. Traders say, however, that the market remains in the low $270s/mt FOB for both prilled and granular urea.
Indonesia: Sources say about 15 of the 18 companies bidding in the Pusri tender were awarded lots of 5,000 mt each.
The tons sold from Pusri have to be in small lots because of the shallow draught of the loading port.
Sources say Pusri will make out all right in the tender on two levels.
The first is the decent – albeit lower than expected – selling price of the urea.
The second is the income Pusri will receive from buyers who will have to rent the Pusri shallow-bottom vessels to get the urea from the plant to the ultimate buyer in the region.
One trader said finding the right-sized vessel to load the cargo is difficult, and for a fee Pusri will make the transfer of product easier.
NITROGEN SOLUTIONS
U.S. Gulf: Players last week called new trades at $142-$146/st FOB ($4.44-$4.56/unit). Sub-$140/st FOB product was said to be history. Sources called the market firm, with producers eyeing $150/st FOB for the next round of sales. To date, however, most said that number was doable for forward, but not prompt.
Producers have argued that UAN values have woefully lagged urea, and sources say they appear to be doing all they can to remedy that situation. A huge drop in recent UAN imports is helping them. Others said urea prices are going to have to keep on moving up in order for UAN to keep its price advantage in buyers’ minds.
As of Oct. 29, Direct Hedge had the paper market at $145-$155/st FOB for November-December. Prices were $160-$170/st FOB for January-March and $150-$155/st FOB April-June.
Eastern Cornbelt: The UAN cash market was pegged at $5.65-$6.05/unit FOB regional terminals, with spring prepay quotes reported in the $6.25-$6.35/unit FOB range.
Western Cornbelt: Regional sources reported a strengthening UAN market. The low end was quoted at $5.60-$5.65/unit FOB on a spot basis, but several sources said dealer pricing had firmed to $190-$195/st ($5.94-$6.09/unit FOB) most regional terminals to the dealer. One Iowa source reported a firm $6.00/unit FOB in his trade area.
Koch’s UAN-32 postings firmed on Oct. 30 to $190/st ($5.94/unit) FOB Enid, Okla., and $200/st ($6.25/unit) FOB Dodge City, Kan. The Oct. 24 reference level at Dodge City was $180/st ($5.63/unit) FOB.
Northern Plains: UAN pricing was up from last report, with sources quoting the dealer market at $5.95-$6.15/unit FOB regional terminals. Delivered UAN-28 was tagged at $175-$180/st ($6.25-$6.43/unit) in North Dakota.
Eastern Canada: Dealer reference levels for UAN remained in the $9.12-$9.21/unit FOB range in the region, with the low end reported at the $8.70/unit FOB level.
AMMONIUM NITRATE
Western Cornbelt: Ammonium nitrate was steady at $255-$260/st FOB in the region.
Eastern Canada: Ammonium nitrate was unchanged at a nominal $385-$400/mt FOB in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was unchanged at $170-$180/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate pricing remained at $170-$180/st FOB or rail-DEL in the region.
Northern Plains: Granular ammonium sulfate was quoted at $180/st FOB in the region, with delivered product at $180-$195/st, depending on location and supplier.
Northeast: Granular ammonium sulfate was steady at $163/st FOB Hopewell, Va., with delivered granular sulfate pegged at $180-$190/st in the region, depending on location.
Eastern Canada: The granular ammonium sulfate market had reportedly dropped to $318/mt FOB in Ontario, with fine grade referenced at the $151/mt FOB level.
PHOSPHATE
Central Florida: Phosphate producers were closing in on a settlement for fourth-quarter sulfur prices, which sources said appeared likely to increase about $20/lt for molten delivered to Tampa.
Although the domestic fall season, which was getting close to the end, had yet to begin as of late last week, producers and traders were hoping the weather would take a break from the frequent rain and allow farmers to harvest their crops. If that happens this week, buying could start fairly soon. If not, it would be a matter of waiting until the spring season. The big question that still remained was whether phosphate-processing plants in Central Florida would curtail operations, and that had not been answered as of late last week.
With the exception of formula sales under existing contracts, no new prompt sales were found last week.
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. The prices from Agrifos were still $300/st FOB for DAP and $305/st FOB for MAP.
U.S. Gulf: Rain and high winds continued to be a problem in the Midwest last week, as farmers were struggling to find a window to get in their fields and harvest their crops. The good news late last week was for far better weather this week.
Soybeans were fetching just under $10/bushel and corn was running around $3.70/bushel, slightly below a week earlier. However, soybeans were between 50 and 85 percent done, but the corn crop was only 5 to 15 percent harvested. Some fears of crop damage to corn were being expressed, but there was no clear indication that had actually occurred. If the crop does not come out of the field soon, those fears could be realized.
“Farmers aren’t thinking about buying fertilizer now,” one trader said. “They just want to get their crops harvested, then they will think about fertilizer.”
In some areas, phosphate was beginning to move out of warehouses at an increased rate, and prices were holding firm along the Mississippi River and other waterways farther north. On the Arkansas River system, movement of phosphate out of terminals was a nonevent, because the weather has been even worse than in most other areas.
The lack of NOLA DAP barge sales in recent weeks has made the market softer, and some who are required by contract to take barges were lowering their prices. After rumors, which could not be substantiated, of offers to sell in the $250-$255/st FOB range made their rounds, one trader sold a barge at $262/st FOB. However, information that CF Industries was willing to sell at $260/st FOB – and possibly lower – helped push the decision to sell at the lower price. If there is a rush on dealers’ warehouses in the next couple of weeks, NOLA DAP barges prices will probably rebound.
The NOLA DAP barge price range last week sunk from a flat $270/st FOB the previous week to $262/st FOB. Mosaic was seeking $295/st FOB. Both Mosaic and CF were charging a $10/st FOB premium for MAP.
Eastern Cornbelt: The DAP market was tagged at $305-$310/st FOB in the region, with MAP $10/st higher. 10-34-0 was quoted at $310-$315/st FOB to the dealer.
Western U.S.: Agrium’s Nov. 1 phos acid postings include $740/st rail-DEL for both SPA and MGA in Arizona, California, Idaho, Montana, Nevada, Oregon, Utah, and Washington.
Western Cornbelt: DAP pricing continued to be quoted at $300-$305/st FOB in the region, with the low reported in the St. Louis market. MAP was 10/st higher than DAP.
10-34-0 was pegged at $305-$315/st FOB in the region. Agrium’s Nov. 1 phos acid postings include $670/st railDEL for both super phosphoric acid and merchant grade acid in Iowa, Nebraska, Colorado, Kansas, New Mexico, Oklahoma, and Texas.
Northern Plains: DAP was steady at $305-$315/st FOB the Twin Cities, with MAP $10/st higher. Delivered green MAP in North Dakota was reported at the $345/st level by truck or rail from western shipping points.
The regional 10-34-0 market was tagged at $310-$320/st FOB and $315-$320/st DEL. Agrium’s Nov. 1 phos acid postings included $670/st rail-DEL for both SPA and MGA in Minnesota, the Dakotas, and Wyoming.
Northeast: MAP was quoted at $325-$335/st FOB in the region, with the low in western Pennsylvania. DAP was $10/st less than MAP, where available. One source pegged delivered MAP at roughly $350/st in New England, but sources reported no sales to test the market.
10-34-0 was pegged at $320-$325/st FOB the tank in upstate New York. 11-37-0 in that market was pegged at the $350/st FOB level.
Eastern Canada: One source said the only fall movement has been a little phosphate and potash on fall wheat, with no plowdown activity taking place in the region. DAP was steady at $450-$475/mt FOB regional warehouses to the dealer, with MAP reported at $435-$460/mt FOB. The upper end of both ranges reflected dealer postings. No current prices were reported for TSP.
U.S. Export: Last week, export phosphate sales increased but prices took a dive.
PhosChem made a sale of a panamax-sized vessel to China in a deal that should net back $290/mt FOB, and another vessel from North Africa was also sold to China on a formula basis. The product will be delivered to the northern part of the country, and higher prices in China were said to have been responsible. Gavilon was also said to have sold a vessel into China, but that was not confirmed.
In addition, Transammonia sent a handymax vessel, about 40,000 mt, into Pakistan at a delivered price of $350/mt FOB, which would result in an FOB price of between $282/mt FOB and $284/mt FOB, depending on freight.
A week earlier, PhosChem sold two vessel loads of MAP into South America – one for Argentina and the other to Brazil. The vessel destined for Argentina was originally intended for warehouses owned by a PhosChem member, but several small buyers made late moves to claim the material, so a second vessel will be sent. The price for the delivery to Argentina was $292/mt FOB, while the phosphate for Brazil will fetch $296/mt FOB.
Based on sales last week, the export DAP price range fell to $282-$290/mt FOB from $310-$312/mt FOB.
POTASH
Eastern Cornbelt: The potash market was pegged at $450-$460/st FOB regional warehouses, reflecting another slight drop from the previous week.
Western Cornbelt: The dealer market for potash was quoted at $450-$467/st FOB in the region, with the upper end quoted for white granular potash out of spot Missouri River locations. An Iowa contact put the red granular potash market at the $455/st FOB level in his area last week. “If we had the opportunity to run, we could sell some product at these levels,” said one source. “But there’s many who still think this market will get cheaper.”
Northern Plains: The potash market had reportedly slipped to $450-$470/st DEL in the region, depending on grade, location, and supplier. Potash postings remained at $467-$480/st FOB Saskatchewan mines to U.S. customers, although several sources said those levels do not reflect the true market – provided there is a true market, given the lack of new business.
Northeast: The regional potash market continued to slide. Sources quoted dealer pricing last week at $485-$495/st DEL, depending on location and grade. Out of warehouse locations in western Pennsylvania, the market had reportedly dropped to $460/st FOB.
Eastern Canada: Ontario sources said potash warehouse pricing had dropped to $520-$560/mt FOB by late October, depending on grade and location. One source quoted dealer pricing at the $550/mt FOB level for red granular potash and $560/mt FOB for white granular, while another said $520/mt FOB was doable for 60 percent muriate of potash in his location.
Posted prices FOB New Brunswick mines had not changed from July 24 levels, when PCS Sales moved its 60 percent Sussex price to the $610/mt FOB level.
“Dealers and farmers are reasonably comfortable with phosphate numbers, but still don’t like the potash numbers,” said one regional contact last week. “That has impaired potential movement. Guys are just taking a holiday from buying potash.”
The K-Mag market was unchanged at $427/mt FOB in Ontario.
SULFUR
Tampa: Late last week, both Mosaic and PotashCorp were in the process of settling fourth-quarter sulfur contracts $20/lt up from the third quarter, which would result in a new price of $30/lt FOB for molten delivered to Tampa. That price bump will be about the cost of transportation, but little in the way of profit for sulfur producers. Still, it will help.
A better deal for refineries was selling prill for the export market from the Gulf, where sulfur was netting about $30-$35/mt FOB.
Refineries continued to take a beating, as demand for gasoline remained very low due to the economy. Some were taking longer turnarounds than they normally would, and others were curtailing operations. However, a source said the amount of sulfur available was slightly greater than a week earlier.
Spot sales of sulfur for the East Coast were said to be running in the $50-$80/lt range, which was significantly more than the new Tampa contract price, if that holds.
Green Markets policy requires that the index not be amended until the major phosphate companies have reached final agreements with all of their major suppliers; the new price will be posted once that occurs.
Vancouver: Contract and spot prices for sulfur out of Vancouver were running between $40/mt FOB and $45/mt FOB, and sales were on the increase, as China is now in the market.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 49.03 | 56.91 | 35.06 |
| CF Industries | CF | 86.00 | 93.82 | 53.78 |
| Intrepid Potash | IPI | 26.40 | 28.56 | 18.27 |
| Mosaic | MOS | 48.96 | 53.22 | 33.65 |
| PotashCorp | POT | 96.82 | 102.96 | 79.40 |
| Terra Industries | TRA | 32.74 | 35.36 | 21.12 |
| Terra Nitrogen | TNH | 104.97 | 107.50 | 68.98 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 33.36 | 34.86 | 25.14 |
| Deere & Co. | DE | 47.51 | 48.38 | 35.74 |
| Scotts | SMG | 41.38 | 43.22 | 24.50 |
SPOT BARGE PRICES
Terra to buy stake in Carseland plant if Agrium acquires CF
Terra Industries Inc. and Agrium Inc. announced Oct. 19 that they have signed an agreement in which Agrium would sell to Terra a 50 percent stake in Agrium’s Carseland, Alberta, nitrogen plant and certain U.S. assets for a purchase price of approximately US$250 million. However, the deal is contingent upon Agrium buying CF Industries Inc.
Agrium said it believes this agreement will address regulatory concerns under Canadian competition law in connection with its offer to acquire CF. Agrium also expects to refile its Hart-Scott-Rodino notification shortly with the FTC. CF has argued for some time that regulators may have trouble with an Agrium-CF deal.
“These actions will enable us to keep moving forward with the acquisition of CF Industries,” said Mike Wilson, Agrium president and CEO. “We believe CF stockholders strongly support our offer, and we will continue to press CF to engage with Agrium. We urge CF to begin meaningful discussions with us concerning our proposed acquisition.”
Agrium has extended the expiration of its offer to acquire CF for $40.00 in cash plus one Agrium share per CF share until 12:00 midnight, New York City time, on Nov. 13, 2009. As of Oct. 16, approximately 9.1 million common shares of CF had been tendered into and not withdrawn from the exchange offer.
Under the terms of the Carseland transaction, Terra will pay Agrium approximately $250 million in cash for 50 percent of the Carseland facility, or approximately 340,000 mt of urea and over 60,000 mt of net ammonia on an annual basis, and certain U.S. assets. The Carseland facility has the capacity to produce approximately 590,000 st of gross ammonia and approximately 750,000 st of granular urea per year. The purchase price for the 50 percent of Carseland is at a similar forward multiple to that which Agrium is offering for CF.
Agrium has also entered into a conditional supply arrangement with Terra for a long-term, competitively priced supply of approximately 175,000 mt of nitrogen products from Terra’s facilities.
Terra says the deal would provide it with important financial and strategic benefits, including greater exposure to cost-advantaged natural gas, a more diverse geographic footprint in North America, and ownership in a facility that enables the manufacturing of upgraded ammonia-based products, consistent with Terra’s long-term strategy.
On an as-adjusted operating basis for the twelve-month period ending June 30, 2009, Terra estimates gross revenues for 50 percent ownership of the Carseland facility would have been approximately $125 million, operating income approximately $33 million, and depreciation and amortization approximately $16 million.
“We are pleased with this opportunity to expand our portfolio of quality nitrogen fertilizer manufacturing assets,” said Michael Bennett, Terra president and CEO. “The Carseland, Alberta facility has a prime inland location and is designed to upgrade much of its ammonia to the value-added product urea.
“Four of Terra’s seven North American ammonia plants are currently supplied with natural gas in regions that are cost-advantaged to Henry Hub prices,” Bennett added. “This addition of nitrogen production capacity in western Canada would bring to Terra another North American gas source that has a long history of selling at a discount to key U.S. trading hubs.
“This transaction is consistent with Terra’s pure-play nitrogen strategy, which distinguishes Terra from its competitors,” he continued. “The transaction would be immediately accretive to Terra shareholders, and we believe it is a solid opportunity to create shareholder value.”
In addition to the conclusion of an Agrium-CF deal, the closing is also contingent on Terra’s raising $600 million of debt capital. On Oct. 19, Terra announced the pricing of its private offering of $600 million aggregate principal amount of Senior Notes due 2017 and to pay related premiums, fees, and expenses, pursuant to a cash tender offer announced on Sept. 24, 2009. Subject to certain conditions, Terra also intends to use a portion of the net proceeds of the offering, together with available cash, to pay a planned special $7.50 per share cash dividend (GM Sept. 28, p. 1) and to consummate asset acquisitions.
PotashCorp 3Q net income off 80 percent
PotashCorp reported an 80 percent drop in net income for the third quarter ending Sept. 30, 2009, to $248.8 million ($.82 per diluted share) on sales of $1.1 billion, compared to the year-ago $1.24 billion ($3.93 per share) and $3.06 billion, respectively. Nine-month net income was $744.2 million ($2.45 per share) on sales of $2.88 billion, versus the year-ago $2.71 billion ($8.45 per share) and $7.57 billion.
The company said the continuing caution among fertilizer buyers around the world has affected sales volumes and prices for all three nutrients. However, it noted that despite the lower volumes, potash generated 73 percent of the company’s total third-quarter gross margin of $346.2 million.
“This quarter was a reminder of the contrast between long-term fundamentals and short-term uncertainties,” said Bill Doyle, PotashCorp president and CEO. “Even though the science of food production and fundamentals of global development dictate that more fertilizer, especially potash, is needed around the world, the impact of the global financial crisis remained a difficult hurdle in the third quarter. The uncertainty among fertilizer buyers has lasted far longer than we anticipated, but cannot continue indefinitely. Our focus is on preparing for the demand rebound that we believe will inevitably follow. We will be ready to serve our customers and deliver returns for our investors.”
Doyle told analysts there are three factors that will lift the industry out of its current malaise ?Çô crop prices, logistics concerns, and China. He said the U.S. harvest is the slowest since 1985. This has slowed fertilizer buying, but he was hopeful that recent boosts in corn prices would help to thaw the supply channel and get product moving.
Unless movement starts soon, he foresees logistics problems in 2010. He said he never expected too much out of the fall season due to the expected late season, but this will put more pressure on transportation for spring application.
Another major factor is China, and he said their crop yields are beginning to suffer. He expects China to come into the market for some 8-9 million mt of potash for 2010, and to do so by the end of 2009. Doyle estimates Chinese inventories at between 2-3 million mt, and he says they will start buying when it drops to 2 million mt.
That said, Doyle said that with respect to China he has fallen on his face regarding forecasting. “… we get our information from our partner Sinofert, and I told our partner that he’s helped me to look like a jerk the whole year long. And he said, well, he’s had a very difficult time forecasting as well. And I would tell you around the world – in Brazil, we’ve got people that are long-time in this business, that have tremendous expertise, who all say to me ‘you know, I’ve never seen anything like this before.’ Well, it’s true. And so the Chinese contract, we’re going to wait for it to finish.”
Overall, Doyle expects global trade in potash to return to more normal levels at 50 million mt in 2010, versus the expected 30 million mt in 2009.
Dave Delaney, president of PCS Sales, told analysts that the company expects 2009-2010 U.S. nitrogen consumption to be up 5-10 percent, phosphate 20-25 percent, and potash 25-30 percent.
Third-quarter potash gross margins were $251.4 million on sales of $423.4 million, versus the year-ago $909.7 million and $1.14 billion, respectively. Third-quarter sales volumes were 1 million mt, down from the year-ago 1.855 million mt. North American sales dropped to 266,000 mt from 530,000 mt, while Offshore sales were down to 748,000 mt from 1.325 million mt. The average North American price was $417.38/mt, down from the year-ago $561.70, while the Offshore price was $379.24/mt, down from $601.34/mt.
Nine-month potash margins were $524.2 million on sales of $903.3 million, versus the year-ago $2.3 billion and $3.13 billion.
Third-quarter phosphate gross margins were $44.2 million on sales of $357.4 million, compared to the year-ago $507.2 million and $1.08 billion. Overall, phosphate volumes were 882,00 mt, down from 969,000 mt, with the average price falling to $356.24/mt from $1,069.38/mt. Solid phosphate fertilizer sales were 334,000 mt, down from 352,000 mt, with the price falling to $267.71/mt from the year-ago $1,084.98/mt. Liquid phosphate fertilizer volumes were 255,000 mt, down from 271,000 mt, with prices falling to $267.58/mt from $1,238.35/mt.
Nine-month phosphate gross margins were $73.5 million on sales of $1.01 billion, versus the year-ago $1 billion and $2.37 billion.
Third-quarter nitrogen gross margins were $50.6 million on sales of $318.3 million, versus the year-ago $324.1 million and $838.9 million. Total nitrogen volumes sold were about level with the year-ago quarter, at 1.37 million mt versus 1.39 million mt. However, the average price was down to $203.73/mt from the year-ago $546.17/mt.
Nine-month nitrogen gross margins were $148.7 million on sales of $962.3 million, versus the year-ago $719.5 million and $2.06 billion.
Committee approves chem facility bill; industry gets concessions, still skeptical
The House Energy and Commerce Committee on Oct. 21 approved the Chemical Facility Anti-Terrorism Act of 2009 (HR 2868) by a vote of 29 to 18. The bill would permanently grant the U.S. Department of Homeland Security (DHS) authority to regulate security measures at chemical facilities and expand current regulations to include Inherently Safer Technology (IST) requirements and civil enforcement provisions.
The committee also approved by voice vote an amendment to HR 2868 offered by Reps. Mike Ross (D-Ark.) and Zack Space (D-Ohio) that would require DHS to conduct an economic assessment regarding the impact an IST requirement would have on agricultural facilities covered by these security regulations. The Ross-Space amendment also includes authorization of a $3 million grant program to help agricultural retailers and distributors required to conduct an IST assessment.
The Agricultural Retailers Association, which joined The Fertilizer Institute and the American Farm Bureau Federation in sending letters to Ross and Space expressing support for the amendment, applauded its approval while continuing to voice concerns about the potential impact of an IST mandate on the fertilizer and agrichemical industries. ARA, TFI, and numerous other industry associations have also voiced opposition to the “citizen suit’ provision in the bill, which would allow any person to bring suit against DHS to enforce compliance with the act (GM Oct. 19, p. 15).
“ARA applauds Representatives Ross and Space for their leadership in securing adoption of a provision that will require DHS to review the economic impact an IST requirement would have on the nation’s agricultural industry and consumers,” said Richard Gupton, ARA vice president of legislative policy and counsel. “The grant program can provide much needed financial assistance for these facilities to meet new IST regulatory requirements.”
ARA said it continues to oppose HR 2868 primarily due to the IST and civil enforcement provisions, which it claims “could lead to the loss of widely-used and essential, lower-cost sources of plant nutrient and crop protection products and increase production costs for farmers and ranchers.” Anhydrous ammonia and ammonium nitrate are cited as the fertilizer products most vulnerable to an IST provision. Rep. John Shimkus (R-IL) last week offered an amendment to eliminate the IST provision completely from HR 2868, but it was defeated by a vote of 14 to 28.
The committee last week sought to address the concerns related to the IST language in a memo prepared by subcommittee chairman Ed Markey (D-Mass.). “The American Farm Bureau and others in agribusiness have circulated a letter claiming that the Chemical Facility Anti-Terrorism Act (HR 2868) will have a detrimental impact on the agricultural sector,” the memo said. “These concerns are not based on fact.”< Markey said farmers and other agricultural end-users of the "regulated chemicals of concern" covered by the bill received an indefinite extension in January 2008 of the compliance deadlines for the existing Chemical Facility Anti-Terrorism Standards (CFATS). Markey said DHS has indicated that there is nothing in HR 2868 that would require it to deviate from its plan to address the security of these facilities differently. Markey also claimed that only a small number of the highest-risk crop-related facilities are subject to the IST provision in the bill. "The highest risk crop-related facilities, such as pesticide or fertilizer manufacturers, are already subject to chemical security regulations under CFATS," the memo said. "HR 2868 would additionally require Tier 1 and 2 facilities (the highest risk) to assess whether they could use alternative chemicals or processes to reduce the consequences of an act of terrorism and to implement these alternatives if doing so a) would reduce the risk posed by the facility, and b) is technologically and economically feasible.” The memo said DHS has placed seven crop-related facilities nationwide in the top two tiers. Of these, five are manufacturers of pesticides/fertilizers, and two are farm supply/merchant wholesalers. “These high-risk crop-related facilities pose a grave threat to neighboring communities in the event of a chemical release and therefore should comply with the same requirements as other high-risk facilities,” the memo said. Markey also argued that only a small percentage of farm supply and merchant wholesalers would have to assess whether they can switch to inherently safer technologies. “Preliminarily, DHS has placed 26 pesticide/fertilizer manufacturers and 601 farm supply facilities and merchant wholesalers in Tiers 3 and 4 of the CFATS program,” the memo said. “HR 2868 would require these Tier 3 and Tier 4 facilities to conduct IST assessments but would not require them to switch to safer chemicals or processes.” Markey added that these Tier 3 and Tier 4 facilities account for just 7.8 percent of the farm supply/merchant wholesalers in the U.S. Others in Congress were urging the committee to consider adding language to the bill addressing the rail transportation of toxic-by-inhalation commodities, an issue that continues to produce heated debate between the chemical and railroad industries. Rep. George Miller (D-Calif.), in an Oct. 13 letter to committee chairman Henry Waxman (D-Calif,), pressed for measures to “help mitigate dangers posed by potential accidents and terrorism associated with the transportation of chlorine by rail car.” While focusing on chlorine and never mentioning anhydrous ammonia by name, Miller wrote that “our railroads have a huge burden to try to safeguard toxic inhalation hazard (TIH) chemical shipments throughout their vast networks of rail lines that often pass throughout our nation’s neighborhoods. While we appreciate that the railroads are doing a great deal to improve security, we must look for ways to reduce the TIH chemical shipments that are so hard to protect.” Gupton told Green Markets that ARA opposes the Miller recommendation. “The industry has its work cut out to educate members of Congress on the importance of these products to the industry and why they are essential to keep our agricultural productions costs low,” he said. “The same arguments Miller is using on chlorine are likely to be used with anhydrous ammonia.”
ARA said the full House is expected to consider HR 2868 under a structured rule in the coming weeks, which will limit opportunities to offer amendments.