New York-New York Organic Fertilizer Co., the focus of repeated protests over foul odors caused by the processing of sewage into fertilizer, is being sued by N.Y. State Atty. Gen. Andrew Cuomo, who announced Feb. 5 he is joining efforts to protect the right to clean and healthy air. “The facility has been a foul and persistent threat to Hunts Point for years,” declared Cuomo, who said he is also including in the suit the parent company Synagro Technologies Inc. He added, “The stench has plagued the community, making simple activities like opening windows, walking to school or enjoying a local park not only unpleasant, but an actual health risk.” Both plant officials and those with Houston-based Synagro denied violating pollution laws, describing the plant as a “good neighbor.” Synagro’s statement, released through their lawyer, Christopher McKenzie, a prominent New York environmental attorney, insisted that the “facility has taken, and will continue to take, proactive measures to ensure that it is in compliance with its permits and applicable law and is a good neighbor in the community.” Cuomo’s lawsuit charges that New York Organic Fertilizer, located in the Hunts Point neighborhood of South Bronx, has created a public nuisance under New York State law by producing odors that “unreasonably interfere with the comfortable enjoyment of life or property.” Further, the lawsuit charges that the facility and Synagro have failed to control odors “so they do not constitute nuisances or threats to public health, safety or property.” New York Organic accepts sewage sludge from New York City’s sewage treatment plants and processes it into fertilizer pellets for sale to out-of-state agricultural operations. The attorney general’s lawsuit aims to address the odor problems by requiring both companies to comprehensively investigate solutions to ending offensive and noxious odors and then implement those that will be most effective.
All posts by traceybg@gmail.com
Alberta bans weed and feed effect 2010
Edmonton, Alberta-As a means of protecting downstream water quality in urban areas, weed and feed lawn products popular with home owners will not be sold in Alberta starting Jan.1, 2010, according to the province’s environmental ministry. “We need to take steps wherever possible to protect and preserve the quality of Alberta’s rivers and lakes,” declared Environment Minister Rob Renner. “This is a simple measure that Albertans can take to curb the amount of chemicals entering our water by our eliminating products that encourage mass application and reducing the amount of chemical runoff in our waterways.” Renner said that the combination has been found to be highly mobile and commonly appears in water downstream of municipalities, occurring when excess chemical runs off lawns into storm drainage systems and is deposited into creeks and rivers. In some cases, he added, more than 10 times the required amount of pesticide is applied to lawns when weed and feed is used. He said the decision to ban weed and feed will not impact the agriculture sector or the landscaping industry since these products are almost exclusively used on homeowners’ lawns. The weed and feed ban is viewed as a proactive measure by the province since the current average amount of 2,4-D in surface water downstream of Alberta municipalities is below the recommended federal threshold. Regulation of pesticide use is typically the responsibility of Health Canada’s pest management regulatory agency.
Management Briefs
Kent Whittig of Simplot Wholesale Sales has been promoted to manager, Wholesale Technologies, a new position within the company’s sales force. Whittig will be working with the Wholesale sales team and customers to help grow the sales of Simplot’s phosphate-enhancing Avail and nitrogen-enhancing Nutrisphere-N products. The company said the creation of the new position “further reinforces the commitment of Simplot AgriBusiness to making fertilizer efficiency technologies a part of our standard offering.”
Whittig has been with Simplot since 2002 and has held various positions, including seed marketing representative, area operations manager, national seed sales and marketing manager, and most recently market manager for the SGS Retail North Valley division in California. In his new role, Whittig will be located in Boise, Idaho, and can be reached at 208-672-2730 or by email at kent.whittig@simplot.com.
Market Watch
AMMONIA
U.S. Gulf/Tampa: Both Yara and PCS Sales were reported to have made sales to CF at $275/mt DEL. Yara was for the full month and PCS was for a 15,000 mt cargo in the second half.
In the meantime, across the Gulf, sources reported that the latest NOLA prompt barge sale was done at $275/st FOB.
Eastern Cornbelt: Anhydrous ammonia pricing remained in the $450-$550/st FOB range, with the low for cash tons in Illinois.
Western Cornbelt: Missouri sources reported running a little ammonia to the field last week, although activity was very limited. Anhydrous ammonia pricing remained at $400-$525/st FOB regional terminals, depending on location and time of delivery. Delivered ammonia to points in Missouri remained in the $425-$450/st range from production points in Oklahoma and Kansas.
Northern Plains: Sources reported little change to the spot fertilizer markets, and activity in the region was quiet. One North Dakota source noted that there is a lot of unworked ground from last fall, so both growers and dealers are hoping for an early start to spring fieldwork, along with cooperative spring weather during the busy planting time.
In Minnesota, the ammonia market remained in a broad range at $450-$550/st FOB, depending on location and time of delivery. Delivered ammonia was quoted at $550-$600/st in the region.
Black Sea: Asian sources report prices are moving up, but not enough to encourage Ukrainian plants back into production. Sales of material from the area are described largely as ammonia left over from urea production rather than deliberate ammonia production for export.
Sources say the price range is now $210-$230/mt FOB, with all indications that the price will keep rising.
Ukrainian producers can only hope the price rises soon, say Asian sources. The production cost to the producers is now pegged at $320/mt because of the new price of Russian natural gas. The breakeven price would have been much higher, said one source, if the Russians got their original pricing idea for the gas.
Demand for ammonia in Asia is helping move the price up, say sources. Unfortunately for the Black Sea producers, the amount of ammonia heading to the East is not as much as producers would like.
Middle East: The price keeps getting better each week ?Çô for producers. Qafco closed a 15,000 mt deal at $250/mt FOB, which represents a $50 increase from the last known bit of business. Some in Asia say the price may be as high as $260/mt FOB. The final home of the ammonia is unknown, but conventional wisdom says the tons will be going to India now that some DAP producers have reached a deal for some phos acid.
Demand from South Korea and Taiwan remains strong. Purchases from Asia are being added to contract tons from the Middle East and the occasional spot purchase such as the Qafco deal.
Asian sources say the price is clearly in the $250-$260/mt FOB range.
Reportedly, producers are more willing to limit production to help sustain the rising prices. One observer noted it would do the producers little good to begin building reserves in their tanks at a time when demand is beginning to outstrip current supplies.
Adding to the Middle East producers’ woes are reports that the Australian Burrup facility is back up and exporting. Also back online is the Mitsubishi/KPI plant in Indonesia.
Asia: Demand is up, but industry watchers are still not sure if the demand is sustainable. The fertilizer plants in South Korea and Taiwan began the call for ammonia as the appropriate application season approached. In the past couple of weeks industrial buyers have begun to step up and ask for tons. Sources say some buyers are looking for purchases into April.
Industry observers note that many of these requests are coming from companies whose tanks are just about ready to run dry.
These same companies did not make their usual purchases during the past few months because of the global economic downturn. Now that their storage facilities are emptying, sources say these buyers are taking advantage of low prices to refill the tanks.
No one was willing to project what will happen after the April orders are filled.
For now, producers are happy to add a few dollars to their sales as demand picks up.
Mitsubishi paid $225/mt FOB for material from Mitco late last week. Mitsui paid $220/mt FOB the previous week. Mitsubishi itself paid $200/mt FOB last month.
The steady increase in pricing was enough to get Mitsubishi to finally fire up its Indonesian KPI plant.
Sources say the plant restarted Feb. 13 and is slowly ratcheting up production. Full production is expected to be achieved by the end of this week.
The return of the Burrup facility in Australia has also heartened buyers. The plant was shut down because of an accident in the natural gas supply chain rather than anything directly related to the weak ammonia market.
Contract buyers in South Korea are reportedly happy that they will soon begin receiving the tons they were promised.
One source noted that the Asian price would have gone up much faster if the KPI and Burrup plants were not back on line. The only problem, this source said, would have been the absence of enough ammonia for the demand.
UREA
U.S. Gulf: Granular barge prices appeared to stall last week, with sources attributing this to wet weather across much of the heartland, as well as nervousness over corn pricing. As for actual trades, sources claimed new business on each side of the previous range, with prices reported at $302-$307/st FOB.
Koch’s Enid, Okla., plant remains down, according to sources, who speculate that it may remain so into April.
Eastern Cornbelt: Granular urea was generally quoted at the $365/st FOB level to dealers, with some suppliers reportedly referenced as high as $375-$380/st FOB for new tons.
Western Cornbelt: The granular urea market was tagged at $355-$365/st FOB to the dealer, with reference prices at the $380/st FOB level from some regional suppliers.
Northern Plains: Granular urea was pegged at $365-$385/st FOB regional terminals, with dealer reference prices quoted at the $395/st FOB mark out of North Dakota shipping points. On a delivered basis, Dakota sources tagged the urea market last week at $375-$400/st.
Northeast: Granular urea continued to be quoted in the $350-$365/st range FOB Baltimore and Philadelphia, with reports of some suppliers referenced at the $375/st FOB level.
Eastern Canada: Sources tagged the granular urea market at $623/mt FOB in Ontario to the dealer, up only slightly from last report.
Middle East: Fertil reportedly closed a deal at $305/mt FOB late last week. The price indicates a growing firmness in the Middle East market as the TCP tender poises to close Saturday, Feb. 21.
The last offer the Middle East producers made to TCP, about $275/mt FOB, was rejected. Now with a sale on the books $30 higher, sources say there is nothing to prevent the producers from trying to move the price into the $320s/mt and higher.
Until numbers are published Feb. 21 in the TCP tender – assuming the Middle East producers participate – sources say the $305/mt FOB is long gone, but still enough to get into the door for a talk.
Sources peg the market just under $320/mt FOB. When pushed to name a range, one trader said $310-$320/mt FOB is a reasonable guess.
Freight remains a big issue. Sources say rates remain a major cause of concern.
Just a month ago some traders were talking about freight rates between the Arab Gulf producers and Pakistan or India’s west coast at just under $10/mt. Now the price is pegged in the upper teens, with a real possibility that it could once again hit the mid-$20s/mt FOB.
The issue, said one source, is that ship owners are putting many of their vessels to the side until really needed. Those that are still plying the seas are in set routes. Any deviation adds additional costs.
None of the producers are said to be operating at full capacity. Many have long-term deals or contracts with buyers from the U.S. to India, and so are able to keep production and shipments going.
Pakistan: A provincial minister of agriculture is not making TCP’s job any easier. Arbab Muhammad Ayub Jan told Pakistani media that at least 300,000 mt is needed quickly to avert a disaster with local crop outputs. This is above and beyond what the central government claims is needed for the rest of the country.
Sources say the province in question regularly experiences shortages of urea because of poor transportation. Few in the industry are taking the panicky tone of the minister seriously, but are keeping an eye on what happens next.
Political fortunes have risen and fallen based on urea distribution in the past, said one source.
The urea being purchased under the TCP tender that closes Feb. 21 is said to be for buffer stocks rather than immediate distribution to the farmers. The international urea community is in general agreement that the tender is not being called out of a dire need for tons. One trader noted that if the price is not to the liking of TCP – that is, significantly lower than the current Middle East quoted price of $305/mt FOB – the company may scrap the tender just as it did earlier this year.
The wild card in the tender may be the freight rates.
The tender calls for offers to be on a delivered basis. Producers have been anxious to play the “low freight” card to claim higher netbacks on their offers. Now, say sources, freight from Yuzhnyy and the Arab Gulf to Pakistan is on the rise. If a producer and trader want to do business with TCP, said one source, the netback may have to reflect a softer urea market than last week’s close.
India: Sources report no one in India is jumping up and down for another tender. The finance ministry is still upset with the amount having to be paid in subsidies, even though the last round of purchases was significantly cheaper than the previous year’s.
So far the Department of Fertilizer has not issued a call for any new purchases. Sources say the stockpiles in India are sufficient to take care of the first couple of months of the next application season.
The delay in buying could help India as producer stockpiles build up following the TCP tender.
Black Sea: With the TCP tender looming, sources say urea and freight rates are climbing. Asian sources say a buyer might get his calls answered at $280/mt FOB, but $285/mt FOB will guarantee a meeting.
Some in Asia have said prices in the $280s/mt FOB reflect a lot of paper trades. Traders, he said, are moving tons back and forth in an effort to show movement in an otherwise stagnant market.
Others, however, say the price has well and truly moved into the $280s/mt FOB, with $300/mt FOB the near-term target.
Indonesia: PIM in Indonesia was going to hold a selling tender earlier this month, but scrapped the deal once the government made it clear support of the local market is a priority. Sources say the domestic market in Indonesia is stronger than the international market at this time. The producer can placate the government – which is facing an election in the next few weeks – and make money by withholding its tons from the international market.
Sri Lanka: The joint tender of CFC and CCF closed Friday, Feb. 20, with a clear indication that traders and producers see the global price moving up.
With freight rates pegged at $40-50/mt, depending on who one talks to and the cost of the financing, Middle East material is clearly coming in above $310/mt FOB.
| Offering company | Quantity (mt) | US$/mt | Comments |
| U.D Buch Chemical Int. | 12,000 | 340.00 FOB | |
| 365.00 CFR | |||
| 380.00 CFR | 180 days | ||
| Transammonia | 24,000 | 383.00 CFR | 180 days |
| ETA | 24,000 | 425.97 DDP | 180 days |
| 383.50 CFR | 180 days | ||
| Kunsun | 12,000 | 370.00 FOB | |
| 390.00 CFR | 180 days | ||
| Toepfer | 24,000 | 368.68 FOB | |
| 378.36 CFR | |||
| 394.55 CFR | 180 days | ||
| Helm | 12,000 | 387.75 CFR | Sight |
| MidGulf | 24,000 | 405.00 FOB | 425.00 CFR | Sight |
| 435.00 CFR | 180 days |
While the Middle East is the most likely source of much of the material offered, some cargoes could come from Vietnam using cross-border Chinese material, or the Black Sea. Depending on the dates for delivery, some Indonesian product might also be considered.
The higher prices, to industry observers, indicate a clear sign that stockpiles for export are not where buyers would like them to be. All eyes will not turn to the TCP/Pakistan tender to see if higher prices and lower availability are indeed the near-term trend.
NITROGEN SOLUTIONS
Eastern Cornbelt: UAN-32 pricing to the dealer remained at $275-$285/st ($8.58-$8.91/unit) FOB regional terminals. An Indiana source pegged the UAN-28 market last week at the $245/st ($8.85/unit) FOB level for prompt tons.
The REMC plant in East Dubuque is expected to return to full production in mid-March, according to company parent Rentech Inc.
Western Cornbelt: The UAN-32 market was quoted in the $265-$285/st ($8.28-$8.91/unit) range FOB regional terminals to the dealer. One Missouri source pegged the common dealer price for cash tons at the $280/st ($8.75/unit) FOB mark last week.
Northern Plains: The UAN market remained at $8.75-$9.25/unit FOB regional terminals, with delivered UAN-28 unchanged at the $265/st ($9.46/unit) level in North Dakota.
Northeast: The UAN-30 market was quoted at $250-$260/st ($8.33-$8.67/unit) FOB regional terminals, with most reporting dealer prices commonly in the upper half of that range FOB Baltimore or Philadelphia. In upstate New York, UAN-32 to the dealer was posted at $296/st ($9.25/unit) FOB terminals for prompt tons. Both ranges were down slightly from last report.
Eastern Canada: UAN-28 pricing to the dealer remained as high as $545-$555/mt ($19.46-$19.82/unit) FOB in Ontario, with UAN-32 referenced at the $632/mt ($19.75/unit) FOB level from some regional suppliers.
Western U.S.: Effective Feb. 19, Agrium’s UAN-32 postings moved to $305/st ($9.53/unit) DEL in Washington, Oregon excluding Malheur County, and northern Idaho; $310/st ($9.69/unit) rail-DEL and $315/st ($9.84/unit) truck-DEL in southern Idaho, Nevada, Utah, and Oregon’s Malheur County; $313/st ($9.78/unit) FOB Sacramento, Calif.; $335/st ($10.47/unit) DEL in Montana, northern Wyoming, and central California; and $340/st ($10.63/unit) DEL in northern California. Agrium’s UAN-28 postings in Montana and northern Wyoming moved on Feb. 19 to $293/st ($10.46/unit) DEL.
AMMONIUM NITRATE
U.S. Gulf: The market remained quiet. While Terra has been having an ammonia turnaround at its Yazoo City plant, it has been making AN using existing inventories and railed-in product.
Western Cornbelt: Ammonium nitrate was steady at $270-$305/st FOB, with the upper end reported in Missouri.
Eastern Canada: Ammonium nitrate pricing was up slightly from last report at $655/mt FOB to the dealer out of regional shipping points.
Western U.S.: Agrium’s ammonium nitrate solution 20-0-0 posting moved on Feb. 19 to $197/st FOB Kennewick, Wash.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was steady at $165-$200/st FOB in the region. One source reported steel mill grade sulfate pricing as low as $145/st FOB at mid-month.
Western Cornbelt: The granular ammonium sulfate market was pegged at $165-$200/st FOB in the region.
Northern Plains: Granular ammonium sulfate was reported at $165-$205/st FOB and $205-$235/st DEL in the region, depending on location and supplier. Those ranges reflected a slight increase from last report.
Northeast: The granular ammonium sulfate market was quoted at $160-$175/st FOB and $182-$200/st DEL in the region last week.
Eastern Canada: Ontario sources continued to peg the granular ammonium sulfate market at $545/mt FOB to the dealer, with reports of fine grade ammonium sulfate available for as low as $152/mt FOB in the region.
PHOSPHATES
Central Florida: PhosChem’s sale of 1.25 million mt to India last week kickstarted not only the export market but domestic markets as well, as producers and traders both saw an increase in sales. TFI said inventories of DAP/MAP fell by more than 230,000 st in January, while phosphate processing was running at 30 percent of capacity. After PhosChem announced the India deal and sales began rising, Mosaic said it planned to increase production – but not to pre-curtailment levels. However, late last week PCS said it did not plan to increase its output at either Florida or North Carolina. Although inventories were down in January, they have still not fallen to normal levels.
Sulfur suppliers confirmed reports of increased phosphate production as demand for sulfur picked up last week.
Generally, phosphate prices appeared to have hit bottom and were moving upward. Traders out of Central Florida were making sales of railcars around $320/st FOB last week, while Mosaic was getting as much as $315/st FOB for DAP and CF posted a price of $310/st FOB. Mosaic charges $10/st FOB more for MAP than DAP, and CF has a premium of $20/st FOB for MAP.
The Central Florida DAP price range moved from $305-$315/st FOB the previous week to $310-$320/st FOB based on sales last week. PCS Sales had no published price. The price from Agrifos was $350/st FOB for trucks and $345/st FOB for rail shipments.
U.S. Gulf: On Wednesday, Feb. 18, after PhosChem announced the big sale to India, NOLA DAP barge sales took a sudden swing upward and prices began to follow suit. On Tuesday, a trader made a sale at $310/st FOB; the following day, the same trader sold another DAP barge at $315/st FOB. Others obtained even higher prices, a sign of life in the market.
In Oklahoma, which has alternated from warm to cold and back again, wheat farmers feared a freeze could hurt their crops, which were farther along than normal. Those growers had a good crop for the first time in several years last season and need another successful year. DAP was moving well out of terminals along the Arkansas River, and was $360/st FOB at most locations. Other areas, including upriver warehouses, were selling for as much as $370/st FOB. The difference of $40-$50/st FOB between the barge and the terminal prices works for operators.
CF posted new prices for NOLA DAP barges to January. In March, DAP will be $325/st FOB, $335/st FOB April through June, $345/st FOB July and August, $370/st FOB September, and $380/st FOB October through December. CF’s premium for MAP was $20/st FOB.
Inventories were on the decline in January, and the large buildup of NOLA DAP barges was quickly disappearing – to perhaps below 100. Mosaic was beginning to increase its production to make certain it can fulfill demand in both domestic and export markets. Some traders said they were out. Another large operator reported it decided to stop NOLA DAP barge sales and declined an offer of $315/st FOB last week. Instead, the plan was to watch for new developments in the market.
Corn was the key for DAP sales, and the big question was how much farmers would actually plant. Estimates ranged from 82 to 87 million. The big question for corn was ethanol production. In some areas, ethanol plants have shut down as demand dropped due to lower oil prices.
The NOLA DAP barge price range last week moved up from a low of $310-$315/st FOB the previous week to $310-$320/st FOB.
Eastern Cornbelt: The DAP market was quoted at $365-$385/st FOB river terminals in the region, reflecting a slight increase from last report. MAP was $15/st higher than DAP. 10-34-0 continued to be quoted in a very broad range at $650-$825/st FOB in the region, with the low in Illinois and upper end reported in Indiana on a spot basis. One source reported a recent 10-34-0 sale in Ohio at the $750/st DEL mark to the dealer.
Western Cornbelt: DAP was quoted at $360-$385/st FOB regional warehouses to the dealer, with MAP priced $10-$15/st higher. The 10-34-0 market continued to be quoted in the $625-$675/st FOB range in the region.
Northern Plains: The DAP market was pegged at $370-$385/st FOB the Twin Cities, with MAP $10-$15/st higher. 10-34-0 remained at $650-$700/st FOB in Minnesota, and tons were reportedly limited.
Northeast: The DAP market was quoted at $405-$442/st FOB regional warehouses to the dealer, with MAP at $420-$457/st FOB. 10-34-0 was reported at $990/st FOB the tank in upstate New York, with some reporting spot pricing quotes as high as $1,100/st DEL to points in Pennsylvania. Those 10-34-0 numbers reflect a sizable jump from last report, and sources said inventories were low.
A Delaware contact reported fairly brisk movement of lime and some dry fertilizer on small grain acreage prior to the midweek moisture, but others continued to talk of expected cutbacks in usage for some products this spring, particularly potash.
Eastern Canada: MAP was quoted at $954-$970/mt FOB in Ontario, down from last report. No current prices were reported for DAP or TSP in the region due to inactivity.
U.S. Export: The phosphate export market surged last week. The biggest news, of course, was PhosChem’s sale of 1.25 million mt to two large customers in India, IFFCO and IPL. Deliveries will begin in March and escalate quickly. That deal was a major breakthrough for PhosChem’s members, who have been struggling with slow sales and high inventories for the past few months. Member Mosaic said it would begin to increase production to meet the higher export demand and the domestic market, which also found new life last week.
In addition, PhosChem sold another 40,000 mt to various customers in Australia, Central America, and Africa last week at prices between $365-$367/mt FOB. The bulk of the DAP/MAP sales were into Australia.
Gavilon sold 10,000 mt into Argentina at a price believed to be $360/mt FOB, and KeyTrade dealt an unspecified number of tons into Vietnam. Vietnam has become a solid market because of China’s 110 percent tax on phosphate exports. Brazil was back in the market last week, but the source, amount, and price were not available, and a tender for 275,000 mt was issued in India.
However, exports in January were down compared to last year. Total DAP exports were 211,421 mt, and MAP exports amounted to only 45,866 mt – both down more than 40 percent from 2008. Naturally, India remained the biggest DAP customer with 143,793 mt, followed by Vietnam at 24,300 mt and Canada at 20,032 mt. Sales of MAP were made only to Canada at 41,357 mt, and the Dominican Republic, 4,411 mt.
Sri Lanka: The just-closed tender in Sri Lanka for at total of 24,000 mt of TSP indicates to Asian sources a strong demand for TSP. One source added the demand should remain strong for the next few weeks.
| Offering Company | Quantity (mt) | US$/mt | Comments |
| ETA Dubai | 12,000 | 398.27 DDP | |
| 350.00 CFR | 180 days | ||
| Helm | 12,000 | 355.00 | 180 days |
| Swiss Singapore | 12,000 | 338.00 FOB | |
| 353.00 CFR | |||
| 365.78 CFR | 180 days | ||
| Valency International | 12,000 | 359.00 FOB | |
| 372.80 CFR | |||
| 384.80 CFR | 180 days | ||
| Samsung | 12,000 | 421.00 CFR | |
| 441.00 CFR | 180 days | ||
| 20,000 | 401.00 CFR | ||
| 421.00 CFR | 180 days | ||
| MidGulf | 24,000 | 465.00 CFR | |
| 475.00 CFR | 180 days |
POTASH
Eastern Cornbelt: Most sources tagged the potash market in the $725-$775/st FOB range in the region from brokers or resellers, with no new sales to test the market.
Western Cornbelt: Potash out of regional warehouses was tagged in the $700-$750/st FOB range to the dealer, depending on grade and location. In Missouri, the market was quoted at $710/st FOB for red granular and $720/st FOB for white granular potash.
Northern Plains: Potash pricing FOB Saskatchewan mines remained at reference levels of $767/st FOB for standard, $780/st FOB for soluble, $772/st FOB for granular, and $780/st FOB for white granular. Delivered potash in North Dakota was pegged at $830-$850/st. Out of regional warehouses, the market was quoted at $750-$800/st FOB, depending on grade, location, and supplier.
Northeast: Potash was pegged at $815-$850/st FOB to the dealer for coarse or granular potash, with delivered pricing quotes in the $850-$920/st range, depending on grade and location.
Eastern Canada: Potash remained at posted levels of $988-$1,023/mt FOB the mine, with the upper end reflecting reference pricing FOB Sussex, N.B. Out of Ontario warehouse locations, sources quoted red granular potash at $1,025/mt FOB and white granular at $1,034/mt FOB. Sources continued to talk of cutbacks in potash usage this spring, but one noted that much depends on the price of corn. “If it goes up, demand figures could change for fertilizer of all kinds,” he said.
The K-Mag market was quoted at $611/mt FOB in Ontario, and sulfate of potash was reported at $1,075/mt FOB for reference pricing to the dealer.
Russia: Uralkali is reportedly cutting production to 25 percent of capacity for the first quarter, according to reports out of Russia late in the week. The cuts are due to weak market conditions.
SULFUR
Tampa: The serious oversupply situation for the sulfur industry eased a bit last week – at least in terms of growth – as phosphate production began to increase. PhosChem’s announced 1.25 million mt sale into India prompted Mosaic to begin running its processing plants at a higher rate, as phosphate inventories were declining at the same time offshore and domestic demands were increasing.
“We’re no longer in a panic mode, but we’re still nervous,” one source said of the change.
In addition to improvements in the phosphate industry prospects, a large number of refineries were on turnaround, and Martin had its new priller unit at Beaumont up and running. The facility now produces about 4,500 mt/day. A vessel was expected to be loaded with 50,000 mt this week.
The outlook for the phosphate industry for the next few months was much brighter, and sulfur will follow along. Sources say if the situation continues to improve by the end of the quarter, the price for the next quarter will not likely go down from the current $0.00/lt Tampa, and could reach back into positive territory – although not by much.
A fire at a CSX railroad bridge forced some sulfur cars to be rerouted last week, but that situation had improved by the end of the week after traffic on the bridge was restored. Sulfur transportation was not a problem elsewhere last week.
West Coast: Negotiations for first quarter contracts were continuing last week, but a resolution was possible sometime this week, sources said.
Vancouver: Sulfur suppliers were negotiating new semester contracts with Brazil last week, and it was probable the $200/mt price will come down drastically.
Pakistan: OGDC on Feb. 18 issued a tender to sell 7,000 mt of sulfur at a minimum base price of US$73/mt in 14 lots ex-Dakhni, Punjab. The last date to receive bids is Feb. 25.
MARKET NOTES
India: A recently announced interim budget allocated Rs 758.68 billion for fertilizers in 2008-09, up from Rs 318.16 billion in 2007-08. This does not cover the entire subsidy bill for the current year, and spillover is expected into the next year. The subsidy for 2009-10 has been pegged at Rs 499.99 billion on the assumption that international prices of fertilizer and raw materials will remain affordable.
- Subsidy on imported fertilizers – Budget estimate for 2008-09: Rs 72.38 billion. Actual expenditure: Rs 109.81 billion. Budget estimate for 2009-10: 78 billion.
- Subsidy on decontrolled fertilizers / Payment to manufacturers/agencies for sale of decontrolled fertilizers – Budget estimate for 2008-09: Rs 108.47 billion. Actual expenditure: Rs 653.51 billion. Budget estimate for 2009-10: 336 billion.
- Special securities issued to fertilizer companies for sale of decontrolled fertilizers: Rs 170 billion.
- Subsidy on indigenous fertilizers – Budget estimate for 2008-09: Rs 129 billion. Actual expenditure: Rs 195.16 billion. Budget estimate for 2009-10: 85.80 billion.
- Special securities issued to urea companies: Rs 30 billion.
- No allocation has been made for capital subsidy for conversion of four existing FO/LSHS plants to natural gas. An allocation of Rs 1.50 billion was made in 2008-09, but this fund was not utilized.
- No allocations have also been made for write-off of loans and penal interest in any public sector company, including MFL and FACT.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 39.29 | 39.20 | 67.96 |
| CF Industries | CF | 54.54 | 55.05 | 126.68 |
| Intrepid Potash | IPI | 22.68 | 23.38 | N/A |
| Mosaic | MOS | 41.73 | 43.05 | 109.55 |
| PotashCorp | POT | 82.44 | 86.09 | 152.50 |
| Terra Industries | TRA | 23.91 | 24.67 | 49.36 |
| Terra Nitrogen | TNH | 121.30 | 127.82 | 112.52 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 13.93 | 15.57 | 44.76 |
| Deere & Co. | DE | 30.38 | 37.30 | 83.49 |
| Scotts | SMG | 29.68 | 34.03 | 37.20 |
SPOT BARGE PRICES
Agrium has record year with $1.3 B net income; 4Q impacted by $261 M write-down
Agrium Inc. reported a record annual net income of $1.32 billion ($8.34 per diluted share) on sales of $10.3 billion for the year ending Dec. 31, 2008, versus 2007’s $441 million ($3.25 per share) and $5.5 billion, respectively.
Fourth-quarter net income was down from the year-ago due to some $261 million in write-downs, mainly for inventory valuations. Net income was $124 million ($.79 per share) on sales of $1.98 billion, versus the year-ago $172 million ($1.24 per share) and $1.49 billion.
“Our fourth quarter margins were excellent again this quarter, even with the challenges of reduced sales volumes and write-downs in inventories due to the unprecedented changes in phosphate and nitrogen prices over the past four months,” said Mike Wilson, Agrium president and CEO. “We ended 2008 with earnings that were three times our previous record, and our strong balance sheet and positive earnings outlook places us in an excellent financial position for the future.”
For the year, Wholesale gross profits were $1.8 billion on sales of $4.7 billion, versus 2007’s $874 million and $2.8 billion, respectively. Fourth-quarter profits were $283 million on sales of $982 million, compared to the year-ago $343 million and $908 million, respectively. Some $121 million of the $261 million in write-downs came from the Wholesale sector.
The Retail segment more than doubled gross profits for the year at $1.4 billion on sales of $5.5 billion, up from 2007’s $676 million and $2.5 billion, respectively. Retail results are not directly comparable to year-ago levels, as Agrium acquired UAP in May 2008. Fourth-quarter profits were $228 million on sales of $1.02 billion, versus the year-ago $179 million and $555 million, respectively. Some $93 million of the write-downs came from this sector due to changes in valuations of future purchase commitments. Agrium said nutrient sales volumes in its legacy North American operations declined 46 percent compared to year-ago levels due to the deferral of applications in the fall into 2009.
Agrium noted strong performance in its Retail crop protection business, with the new UAP assets playing a major role. Seeds profits were down in the fourth quarter due to reduced demand for wheat seeds.
Wilson says Agrium can deliver strong results in 2009. “We believe the reduced crop nutrient use experienced over the past four months is not sustainable and that it will ultimately impact grain production and support crop prices and crop input demand.” Wilson noted that Agrium has been in the crop input business for over 75 years and has never experienced a situation like the one that developed in the past four months.
Wilson estimated that nitrogen volumes were off 35 percent this past fall, with phosphate and potash down almost 50 percent.
“…unless we see a rally in corn prices in the next few months, we anticipate that U.S. growers will likely decrease corn acreage slightly, to 83-85 million acres this spring, in favor of soybeans, primarily in regions outside the core of the U.S. Corn Belt,” Wilson told analysts. “This would still place corn acreage at historic high levels, and it would ensure that there will be sizeable increases in corn acreage the following year, due to the resulting reduction in corn inventories.”
“The nitrogen market has been the first to show considerable improvement over the past month, and margins appear favorable heading into the spring. We’re experiencing strong orders for nitrogen in our Wholesale business, and we are anticipating that farmers will attempt to apply optimal nitrogen rates in the spring, supporting all three business units.”
Agrium noted that The Fertilizer Institute reported urea inventories at the end of December were 83 percent higher than the previous five-year average. However, it also said that U.S. urea imports were estimated to be off 30 percent in the fourth quarter, and some 10 percent of global urea capacity has been curtailed. Agrium expects strong U.S. spring demand as well as good demand from India, and says China has re-imposed prohibitive export tariffs.
For the fertilizer year, Wilson estimates phosphate and potash use could be down 30 percent, having been down 45-50 percent in the fall for the Retail segment.
Agrium noted that TFI reported North American potash inventories in December as 22 percent above the five-year average. However, it also said contract renewals at prevailing spot prices in both Japan and South Korea supported prices though the end of the year and into 2009.
Agrium said that at least 30 percent of global DAP/MAP capacity was offline at the beginning of 2009. It noted that TFI reported that U.S. DAP/MAP inventories at the end of December were 86 percent higher than the previous five years, and that U.S. DAP/MAP production was off 41 percent in the fourth quarter.
“Our production has been throttled back to around 50 percent,” said Wilson, referring to potash. “We have not laid off anyone at this point. We have not shut in our plant totally at this point. But if sales don’t strengthen, we will likely do that.” Although production has been at the 50 percent rate for the past 60 days, Wilson said the company is building inventory at current rates. While there were some Canpotex volumes moving in January, the domestic market is “pretty much dead,” added Ron Wilkinson, senior vice president, and president of Wholesale. Agrium estimates global potash operating rates are off 30 percent.
More of Agrium’s nitrogen plants are running. Exceptions include one unit at Sacramento and the Redwater #1 ammonia plant. The Borger, Texas, plant resumed production this week. “Everything else is flat out,” said Wilkinson. “We are restricted a little bit on feed stock supply at our Joffre plant in Alberta here. On phosphate, Redwater’s running flat out. We have Conda somewhere around 80 percent and our expectation is that will ram up to full rates in the next week or two.” He also noted that the Argentine Profertil facility is at full rates.
In other news, Agrium said it took a $45 million write-down net of non-controlling interest to its $295 million EAgrium investment in the fourth quarter. Under its current agreement in Egypt, Agrium owns 26 percent of MOPCO, with the share exchange completed Jan. 26, 2009. MOPCO has commenced commercial operation at its 675,000 mt urea facility and plans to construct two additional urea trains on its existing site subject to financing, which is not assured in the current environment.
| Whls | Retail | Adv Tech | Total | |||||
| $/millions | 04-08 | 04-07 | 04-08 | 04-07 | 04-08 | 04-07 | 04-08 | 04-07 |
| Total Net Sales | 982 | 908 | 1,022 | 555 | 76 | 70 | 1,941 | 1,426 |
| Gross Profit | 283 | 343 | 228 | 179 | 17 | 15 | 522 | 533 |
| EBIT | 106 | 277 | (54) | 39 | 6 | (2) | 172 | 250 |
| Whls | Retail | Adv Tech | Total | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Total Net Sales | 4,686 | 2,845 | 5,516 | 2,466 | 352 | 249 | 10,031 | 5,270 |
| Gross Profit | 1,791 | 874 | 1,426 | 676 | 79 | 55 | 3,223 | 1,598 |
| EBIT | 1,478 | 667 | 480 | 177 | 33 | 13 | 2,016 | 715 |
| Wholesale 4Q-08 | Net Sales | Gross Profit | Sales Vol. | Selling Price |
| Nitrogen | 355 | 136 | 691 | 514 |
| Potash | 192 | 159 | 283 | 678 | Phosphate | 153 | 86 | 137 | 1,117 |
| Total | 982 | 283 | 1,568 | 626 |
| Wholesale 4Q-07 | Net Sales | Gross Profit | Sales Vol. | Selling Price |
| Nitrogen | 503 | 211 | 1,303 | 386 |
| Potash | 93 | 57 | 462 | 201 |
| Phosphate | 139 | 47 | 266 | 523 |
| Total | 908 | 343 | 2,492 | 364 |
| Wholesale 2008 | Net Sales | Gross Profit | Sales Vol. | Selling Price |
| Nitrogen | 1,815 | 712 | 3,551 | 511 |
| Potash | 816 | 632 | 1,686 | 484 |
| Phosphate | 847 | 421 | 906 | 935 |
| Total | 4,686 | 1,791 | 8,507 | 551 |
| Wholesale 2007 | Net Sales | Gross Profit | Sales Vol. | Selling Price |
| Nitrogen | 1,535 | 508 | 4,422 | 347 |
| Potash | 305 | 167 | 1,684 | 181 |
| Phosphate | 466 | 118 | 1,021 | 456 |
| Total | 2,845 | 874 | 8,867 | 321 |
| Retail | 4Q-08 Sales | 4Q-08 Profit | 4Q-07 Sales | 4Q-07 Profit |
| Crop Nutrient | 631 | 60 | 393 | 83 |
| Crop Prot | 288 | 133 | 87 | 56 |
| Seed/Other | 103 | 35 | 75 | 40 |
| Total | 1,022 | 228 | 555 | 179 |
| Retail | 2008 Sales | 2008 Profit | 2007 Sales | 2007 Profit |
| Crop Nutrient | 2,718 | 627 | 1,453 | 335 |
| Crop Prot | 2,115 | 576 | 619 | 181 |
| Seed/Other | 683 | 223 | 394 | 160 |
| Total | 5,516 | 1,426 | 2,466 | 676 |
| * Volumes are in thousands metric tons; sales and profits $/U.S. | ||||
CF posts record results for year, 4Q, takes P&K inventory write-down of $57 M
CF Industries Holdings Inc. reported record results for both the fourth quarter and full-year ending Dec. 31, 2008, citing higher fertilizer prices, which more than offset lower volumes. Fourth-quarter net income was $190.1 million ($3.59 per diluted share) on sales of $1.07 billion, versus the year-ago $135.4 millon ($2.38 per share) and $852.5 million. The company took a $57 million inventory write-down in the fourth quarter, with $30.3 million and $26.7 million coming from phospates and potash, respectively.
“We performed very well in what proved to be a volatile market for fertilizer, posting substantial increases in both net sales and net earnings despite a more than 20 percent decrease in volume from the year-earlier quarter,” said Stephen Wilson, CF chairman and CEO.
Fourth-quarter nitrogen gross margins were $281.3 million on sales of $705.6 million, versus the year-ago $153.1 million and $630.7 million, respectively. Nitrogen tons sold during the quarter were down to 1.475 million st from the year-ago 1.926 million st.
“During the quarter, spot market prices for our three nitrogen products declined significantly from third quarter levels,” noted Wilson, “but we benefited from the large volume we had booked under the company’s Forward Pricing Program (FPP), which locks in a substantial portion of the margin on nitrogen sales.” CF said its two nitrogen complexes operated at 99 percent of capacity in the fourth quarter; however, they were operating at 75 percent going into 2009, reflecting weaker demand and high fertilizer supply chain inventory. CF bought some 100,000 tons of low-cost ammonia in the for the fourth quarter 2008 and first half 2009 resale.
CF said nitrogen sales under the FPP were 1.1 million tons in the fourth quarter, 75 percent of nitrogen sales volume compared to the year-ago 80 percent.
Fourth-quarter phosphate gross margins were $79.4 million on sales of $366.4 million, versus the year-ago $82.9 million and $221.8 million, respectively. Tons sold were down to 404,000 st from the year-ago 526,000 st.
Phosphate FPP were 206,000 st during the quarter, 51 percent of volumes, versus the year-ago 39 percent.
CF’s Plant City, Fla., phosphate complex operated a 85 percent capacity in the fourth quarter; however, it entered 2009 at approximately 40 percent of capacity, the result of week demand and the high fertilizer supply chain inventories.
CF noted that it has begun marketing purchased potash through its distribution network, with potash sales expected to begin in the spring. Results for potash sales are included in the phosphate segment.
Full-year 2008 net income was $684.6 million ($12.15 per share) on sales of $3.92 billion, up from 2007’s $372.7 million ($6.57 per share) and $2.76 billion.
For the year, nitrogen gross profits were $770.3 million on sales of $2.6 billion, up from 2007’s $446.8 million and $2.04 billion, respectively. Nitrogen tons sold were 6.141 million st, down from 2007’s 6.938 million st.
Full-year phosphate gross margins were $452.4 million on sales of $1.33 billion, compared to 2007’s $223.2 million and $714.8 million. Tons sold were down to 1.787 million st from 2007’s 1.994 million st.
As for CF’s outlook, Wilson said that uncertainty in the grain markets, high fertilizer inventories in the supply chain, and concerns on the part of farmers about input costs and crop economics make it difficut to predict how the spring planting season will play out. “Looking ahead, the fundamentals of agriculture and fertilizer remain strong globally. Once we overcome near-term challenges and providing the weather cooperates, we believe this industry will resume its growth trend.” He noted that the global fertilizer industry responded quickly by reducing capacity, and that this should help eliminate excess inventories and allow production to resume at more normal levels.
Wilson told analysts that CF projects farmers will raise 86 million acres of corn in 2009. Wilson said looking at a model with $3.90 corn, it looks like farmers would favor corn over soybeans. Also, he believes that due to the lighter applications of nitrogen in the fall, there will be a lot of pent-up demand in the spring.
Wilson noted that due to the Russia-Ukraine gas dispute, U.S. nitrogen is even more competitive and that Ukraine is now having to pay much higher natural gas prices, making it difficult for them to compete. Add to that relatively inefficient assets and freight costs, and Wilson said it would make it difficult to get product to CF’s market place. In the meantime, the U.S. is seeing lower gas prices due to quickly developed shale reserves and lower industrial demand.
In other news, CF said it has completed its pre-FEED (front end engineering and design) study for a nitrogen complex in Peru. It said the preliminary cost estimates are attractive and it will now proceed with a full FEED study, which is expected to be completed near the end of 2009. CF is also nearing completion of natural gas negotiations for the complex.
Wilson would not discuss CF’s attempt to merge with Terra Industries Inc., nor would Terra address the same issue in their call with analysts after their earnings were released.
| Q4-08 | Q4-07 | 2008 | 2007 | |
| Sales Volumes (000) | ||||
| Ammonia | 362 | 518 | 1,079 | 1,434 |
| Urea | 616 | 698 | 2,617 | 2,701 |
| UAN | 493 | 705 | 2,405 | 2,754 |
| Avg Selling Prices $/st | ||||
| Ammonia | 653 | 410 | 560 | 388 |
| Urea | 480 | 357 | 462 | 329 |
| UAN | 352 | 239 | 321 | 215 |
| Nat. Gas $/mmBtu | ||||
| Donaldsonville | 10.11 | 8.19 | 9.42 | 7.81 |
| Medicine Hat | 6.77 | 6.42 | 7.74 | 6.24 |
| Sales Volumes (000) | ||||
| DAP | 365 | 436 | 1,532 | 1,624 |
| MAP | 39 | 90 | 255 | 370 |
| Avg Selling Prices $/st | ||||
| DAP | 906 | 420 | 760 | 357 |
| MAP | 903 | 431 | 646 | 366 |
Producers bring plants up, give updates
Several producers last week gave updates on their plants, with much of that news about idled plants returning to production. The Mosaic Co. confirmed that it brought its Faustina, La., ammonia plant back up Feb. 10.
Terra Industries Inc. reported that it was in the process of bringing up its Woodward, Okla., nitrogen plant, which went down late last year. Terra is also breaking ground this month on its 500,000 st/y UAN expansion at Woodward. The startup for that is expected in 2010.
Terra said its Yazoo City, Miss., ammonia plant, is currently undergoing a turnaround. Other turnarounds expected in 2009, include one-half of Verdigris, Okla., and the Courtright, Ont., urea plant.
Terra’s Donaldsonville ammonia plant remains down.
More of Agrium Inc.’s nitrogen plants are running. One unit at Sacremento is offline. The Borger, Texas, plant resumed production this week. There is some restriction on feed stock supply at the Joffre plant in Alberta. The Redwater #1 ammonia plant remains down. On phosphate, Redwater is running flat out. Conda is running around 80 percent, with expectations it will go to full rates within a week or two.
Agrium’s Argentine Profertil facility is back at full rates after a recent turnaround.
Agrium’s potash production has been at 50 percent for 60 days.
CF Industries Holdings Inc. said that although its Plant City, Fla., phosphate complex operated at 85 percent capacity in the fourth quarter, it entered 2009 at approximately 40 percent of capacity.
Intrepid president, COO resigns; misrepresentation cited
Intrepid Potash Inc. said Feb. 11 that it has accepted the resignation of its president and chief operating officer, Patrick Avery. He submitted his resignation and confirmed that despite his several years of attendance and course work at the University of Colorado and Loyola Marymount University, he did not receive a B.A. degree from the University of Colorado or an M.S. degree from Loyola Marymount University, as he had previously represented. The company said it learned of these facts Feb. 10.
Intrepid anticipates entering into an agreement with Avery to serve as an operations consultant for an as yet undetermined period of time. The company will commence a search for a new chief operating officer.
“After consulting with our board of directors, the company accepted Mr. Avery’s resignation because his misrepresentation of his academic credentials was a violation under the Company’s Code of Business Conduct,” said Robert Jornayvaz III, Intrepid chairman and CEO. “We are disappointed with this matter. Pat Avery came to Intrepid with more than twenty years of service with J.R. Simplot and ARCO, and his experience was very helpful to our operations since joining our Company in 2007.”
Avery’s duties as president will be assumed by Jornayvaz, while his duties as chief operating officer will be assumed by Hugh Harvey Jr., chief technology officer. Jornayvaz and Harvey, co-founders of Intrepid, had these respective responsibilities prior to Avery assuming them.
The Fraud Discovery Institute of San Diego claims credit for presenting the information to Intrepid and essentially dared the company to fire him. Prior to Intrepid’s own announcement, Barry Minkow, FDI co-founder, issued a statement saying Intrepid must send a message to Wall Street that under-oath misrepresentations to the SEC are unacceptable. “In this post-Madoff environment it is truly amazing that the average investor who relies upon SEC filings to be accurate before making an investment decision cannot even rely upon the biographical portion of those filings, not to mention what else may be inferred.”
Minkow reportedly owned put options for Intrepid and traditionally buys stock in companies that he investigates. Minkow himself was convicted in 1988 of corporate fraud in the ZZZZ Best carpet cleaning company scandal and served seven years in prison. Today, in addition to FDI, Minkow is a pastor at Community Bible Church in San Diego.
One source noted that had Intrepid remained a private company, this issue would never have come up, and that greater scrutiny for public companies under the Sarbanes-Oxley Act, and now the Madoff scandal, pretty much assured Avery’s quick exit.