Newark, Ill.-The state’s attorney doesn’t think eight years in prison is overly severe for a Missouri man who teamed with a partner to steal anhydrous ammonia from a Newark co-op and sell the agriculture chemical to meth makers in Illinois and Missouri. “Given his background and the nature of the offense it’s not stiff at all,” Kendall County State’s Attorney Eric Weis said of the sentence handed Michael Ray Miller, 52, of Wappapello, Mo., for unlawful possession of anhydrous ammonia in the theft last Dec. 1. “We take it very seriously combining the anhydrous ammonia and the methamphetamine problem,” Weis remarked. He said the 1,100 pounds taken from four tanks at Elburn Co-op facility was enough to make a lot of meth. The two were arrested when a Kendall County sheriff’s deputy saw them filling a tank with anhydrous ammonia from a large storage tank at the co-op. The two suspects also had three other tanks in their possession that had been already filled. Weis said that Miller later admitted that he and his co-defendant had traveled from Missouri to Illinois with empty tanks in their vehicle to steal the anhydrous ammonia, and that their intent was to take the anhydrous ammonia and sell it to meth manufacturers. The case against Miller’s partner is pending.
All posts by traceybg@gmail.com
Management Briefs
CF Industries Holdings Inc. has announced the restructuring of operations responsibilities to improve the alignment of operations with the company’s strategic direction, effective March 31, 2009. As a result, David Pruett, who has served as senior vice president, operations, since 2005, will leave the company on that date.
Under the restructuring, W. Anthony Will, presently vice president, corporate development, will become vice president, manufacturing and distribution. Philipp Koch will remain vice president, supply chain. Both men will report to CF Chairman and CEO Stephen Wilson.
“We appreciate the contributions that Dave made to CF Industries as we made the transition from a cooperative to a public company. He has been instrumental in developing our proposed nitrogen complex in Perú while maintaining and improving the company’s excellent records in safety and productivity at its nitrogen, phosphate, and distribution operations. We wish him the best in his future endeavors. We’re confident that, under our realigned structure, Tony Will and Phil Koch, together with Bert Frost, vice president, sales and market development, will advance the company’s traditions of operational excellence and continuous improvement,” said Wilson.
CF intends to name Will’s successor as vice president, corporate development, in the near future.
CVR Energy Inc. reports that CFO Tim Rens will separate from the company no later than June 30, 2009, as a result of CVR’s decision to relocate the CFO position from Kansas City to Sugar Land, Texas. CVR is in the process of selecting a replacement. Rens will stay on as CFO until a successor is hired and will remain on in an advisory capacity to assure a smooth transition.
CVR’s office staff in Kansas City will remain largely in place, although the new CFO may choose to relocate certain staff members to Sugar Land in the future.
West Central, a farmer-owned cooperative headquartered in Ralston, Iowa, announced that it is expanding its focus on crop nutrients purchasing and merchandising with the hire of J. Paul Konrad as crop nutrient merchandising manager. Konrad will work to grow existing programs and develop new ones, with primary responsibilities focused on procurement, distribution, and inventory management of crop nutrients for the co-op. Konrad has more than 15 years of experience in the agronomy, crop nutrient, and crop protection fields, having previously worked for Agriliance, Winfield Solutions, and Farmland Industries, where he held management positions that included agronomy department manager, crop nutrients manager, and region director. “The volatility in crop nutrient prices and supply has created extraordinary challenges, as well as opportunities,” said Harry Ahrenholtz, vice president of agronomy for West Central. “Paul is a seasoned professional in the agronomy and crop nutrient fields, and brings solid experience to this position. We’re very pleased to welcome Paul to the West Central team.”
Market Watch
AMMONIA
U.S. Gulf/Tampa: The last done at Tampa remains $199/mt DEL for February. One industry observer last week predicted prices could move up in the near term, but speculated that they do not have much upside. In the meantime, buyers cited high inventories, idled phosphate plants, and diminished exports from the FSU as evidence why price ideas should remain on the low end.
Mosaic last week restarted its Faustina, La., ammonia plant, which was perhaps the biggest news in the generally quiet market.
U.S. ammonia imports were off 30 percent in December, according to DOC statistics, to 492,573 st from the year-ago 706,245 st. July-December imports are off 15 percent, to 3.65 million st from 4.3 million st.
Eastern Cornbelt: Anhydrous ammonia pricing remained in the $450-$525/st FOB range, with the low for cash tons in Illinois and the upper end for spring prepay offers. Sources said the lower numbers were meeting rail-delivered tons coming from production points in Oklahoma and Kansas.
Western Cornbelt: Anhydrous ammonia remained at $425-$525/st FOB regional terminals, depending on location and time of delivery. Missouri sources also quoted delivered ammonia in the low- to mid-$400s/st from production points in Oklahoma and Kansas.
California: Anhydrous ammonia pricing remained at $575-$620/st DEL in California, with the low for truck-delivered product and the high for railed tons. Aqua ammonia was steady at posted levels of $155/st FOB in the state. Sources said suppliers were trying to work through some inventory, with pricing adjustments likely to be announced again at the end of February.
Pacific Northwest: Sources pegged the anhydrous ammonia market at $575-$600/st DEL in the region, with the low reported in Washington for cash tons. One source speculated the spring prepay could still be booked at those numbers as well, though no actual business was confirmed.
Western Canada: Anhydrous ammonia was quoted at $799-$844/mt DEL in Western Canada.
Black Sea: Some demand is helping producers think the price should go up. Unfortunately for the producers, say sources, the demand is not strong enough or deep enough to justify any increase in prices. One trader noted that if it were not for the closure of facilities that service the Black and Baltic Seas, the price would drop.
Last week Stirol announced it was closing two ammonia units. The closure comes on the heels of other closures that have taken place throughout the Black Sea because of weaker demand.
Sources say it is only the producers making noise of a price increase. At the same time, buyers only make an approach when a buyer is firmly set. They are not bidding low largely because they do not want to get captured buying a cargo they may not be able to unload.
Middle East: Sources report producers are comfortable with orders for the rest of the month, but that some spot cargoes might be secured at reasonable prices. Of course, the definition of “reasonable” depends on which side of the negotiating table a person sits.
Contract sales have been steady, but not as brisk as sellers would like.
Observers note that Indian buyers have been around, but not at levels similar to previous years. One of the issues appears to be Indian buying of DAP.
Rather than make DAP, which would necessitate ammonia purchases, a number of Indian firms are opting to import the final product.
Some DAP producers are still running in India. The last bit of business done was a couple of weeks ago, when the price moved to $200/mt FOB. Nothing has happened since to move the price either way, say sources.
Asia: The only buyers seen regularly in the market these days are agents from Korean and Taiwanese fertilizer companies.
Industrial buyers are still facing the problem of moving their own final product to consumers. They are not, therefore, in any position to draw down the current supplies of ammonia they hold, let alone buy more tons.
Purchases from fertilizer manufacturers in Taiwan and South Korea have been steady, but hardly strong enough to move markets. Most of these purchases are done under contract or long-term agreements with traders and producers.
The KPI plant in Indonesia remains down. Plant managers are reportedly ready to start production again at any time. The accountants, however, point out that in the current market situation, it is better to keep the plant closed rather than bring more ammonia into an already soft market.
The best guess for a re-start of the plant is now late February or early March, depending on market forces.
Western Europe: Demand has been just strong enough and supplies from Russia and Ukraine just weak enough that prices have reportedly edged upward in Northwest Europe. European sources now peg the market at $270-$290/mt C&F.
UREA
U.S. Gulf: New prompt granular barge trades were put in the $303-$305/st FOB range last week, with offers on the table at $307/st FOB, according to sources last week. While demand is not overwhelming, said sources, it is enough to keep prices moving up at a slow and steady pace.
U.S. urea imports were off 53 percent in December, to 309,694 st from the year-ago 658,029 st, according to DOC. July-December imports are off 17 percent, to 2.67 million st from 3.22 million st.
Eastern Cornbelt: Granular urea was steady at $355-$365/st FOB in the region.
Western Cornbelt: The granular urea market was tagged at $350-$365/st FOB to the dealer.
California: Granular urea remained at $440-$450/st FOB, with the upper end reflecting postings and the low after small discounts.
Pacific Northwest: Granular urea was pegged in at $395-$400/st FOB and in roughly the same range for delivered tons, reflecting a slight drop from last report. One source said no sales are being made at posted levels of $440/st DEL.
Western Canada: Granular urea was steady at $560-$585/mt DEL in the region.
Pakistan: TCP called a tender for 200,000 mt to close Feb. 21 with validity until Feb. 23. Sources say TCP is buying the urea to build up stockpiles for the next application season. The move is seen as more as a political one rather than one based on actual need.
Just as the tender was announced, the Senate Standing Committee on Food, Agriculture and Livestock recommended easing the rules on importing urea. The committee also said Pakistan should arrange to import 100,000 mt of urea each month.
The committee’s report argued that steady, long-term purchases would prevent panic buying by farmers and develop a strong reserve supply of urea.
The reaction from area traders to the committee recommendation was the verbal equivalent of rolling one’s eyes.
One observer said the suggestion was designed more as a political statement. While steady purchases of urea over a long period of time would help reduce the spikes and valleys in urea pricing, he said, overall a commitment to make such a large scale purchase on a regular basis will only serve to drive up the international price.
Indonesia: The Indonesian government tasked Kujang and Gresik to each import 250,000 mt of urea this year.
Urea demand in Indonesia has grown beyond what the state-owned companies – Kujang, Gresik, PIM, and Kaltim – are able to supply, President Susilo Bamban Yudhoyono told area media.
International traders said they will wait for details as to how the two companies will make the purchases before they get excited.
One trader noted that the trade minister said Indonesia could purchase its urea from Ukraine, the Middle East or China. The trader said unless the minister was referring to the border trade Chinese urea that is slipped over the Vietnam border without any export duty, Chinese product would be too expensive for Indonesia.
The move was seen by Asian industry observers as a move by the government to shore up support among the farmers and plantation owners by promising more than enough urea for the coming year.
Sources report that last year the government was under pressure to deny urea export licenses to PIM and Kaltim to ensure better local supplies, even though there were only sporadic reports of shortages in the country.
To some in the international markets, the announcement of buying half a million mt of urea strikes them as a political move rather than as a fully-thought-out plan.
Government figures say Indonesia will need 7 million mt this year, and the local producers cannot handle that demand. One source did note, however, that the 7 million mt figure is contingent on perfect weather throughout the year.
The government has been working on plans to reorganize the urea production operations in the country. In addition to administrative changes, the government is looking to build new plants or revamp old ones to be more efficient. Likewise, the government is working with natural gas suppliers to ensure plants have all the feedstock necessary to run at peak efficiency.
One of the major problems the urea producers have faced in recent years is the lack of a steady supply of natural gas to the plants. A recent agreement among the producers, the national natural gas company, and ExxonMobil has kept the gas steadily flowing.
Black Sea: At least two producers have taken down production units, further tightening the availability of urea in the area.
Plants in Ukraine and Romania are shutting down because of low prices and lack of strong interest.
Some of that might change on the heels of the TCP/Pakistan tender.
Sources report the paper trade in Yuzhnyy is now being quoted as high as $288/mt FOB. However, no one could point to any real business at that level.
Likewise, market bears saying the price is in the mid-to-upper $260s/mt FOB are also being dismissed by many in the industry.
Industry sources say the price is hovering around the $280/mt FOB mark, but again are unable to point to firm business to help plot the price.
Discussions reportedly are centering in the upper $270s/mt FOB, with an occasional nod to peeking over $280/mt FOB.
The industry now seems to be waiting to see what kinds of offers are made in the TCP tender.
Middle East: Producers report being sold out for February and March. Sources point out that these deals are contracts being fulfilled while some plants are in extended turnarounds. Traders are convinced the producers are really sold out. There does not appear to be any of the “we might have tons if the price is right” kind of discussion going on. Producers are rebuffing any attempts to engage in discussions about February or March cargoes.
Prices last quoted put granular at $300-$310/mt FOB and prills at $290-$300/mt FOB.
With no new spot business to point to, sources say previous pricing ideas are still the public figures. However, some observers note that when the TCP tender comes out Feb. 21, if any of the producers offer tons, the price will be significantly higher than current levels.
Many in the industry are waiting to hear more about the discussions that took place at the Arab Fertilizer Association last week. The conventional wisdom says prices will move up rapidly on the TCP tender.
Asia: A few buyers have begun to make inquiries to traders in the past couple of weeks. Sources say local stockpiles are beginning to thin out, and individual country buyers are now looking to pick up a few tons to ensure there are no pictures of empty warehouses to scare the farmers.
What appears to be happening, say sources, is that potential buyers are looking for small quantities at low prices they can mix with the more expensive urea they already own.
South Korea, Thailand, and Vietnam have all been sniffing around looking for tons.
NITROGEN SOLUTIONS
U.S. Gulf: The barge market remained quiet last week. December imports were off 74 percent, to 99,983 st from the year-ago 389,023 st, according to DOC. In the meantime, as earlier reported, year-to-date UAN import stats appear to be extremely inflated (6 million st versus year-ago 1.8 million st), and TFI has asked DOC to investigate.
Eastern Cornbelt: UAN-32 pricing to the dealer remained at $275-$285/st ($8.58-$8.91/unit) FOB regional terminals for cash or prepay offers.
Western Cornbelt: The UAN-32 market was generally quoted in the $275-$280/st ($8.59-$8.75/unit) range FOB regional terminals to the dealer for cash tons.
California: UAN-32 remained at $375-400/st ($11.72-12.50/unit) FOB regional terminals, with the upper end reflecting dealer postings. Sources continued to report rail-delivered tons coming into the state from the Midwest at much lower levels, however, with most quoting levels around the $300/st ($9.38/unit) DEL mark, give or take.
Pacific Northwest: The UAN-32 market was pegged in a broad range at $285-$335/st ($8.91-$10.47/unit) DEL in the region, with the low confirmed by Washington sources for spot tons.
Western Canada: UAN-28 pricing was pegged at $353-$368/mt ($12.61-$13.14/unit) DEL to the dealer.
AMMONIUM NITRATE
U.S. Gulf: The market remained quiet last week. December imports were off 63 percent, to 45,732 st from the year-ago 124,261 st. July-December is off 41 percent, to 328,956 st from 555,430 st.
Western Cornbelt: Ammonium nitrate was pegged at $270-$305/st FOB, reflecting a slight increase from last report.
California: No market was reported for ammonium nitrate in the state. CAN-17 remained at $270-$285/st FOB in California in early February.
Pacific Northwest: Ammonium nitrate pricing was reported at $348-$353/st DEL, reflecting a slight drop from last report. CAN-17 was reported at $222-$225/st FOB in the region, also down from last report.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was tagged at $165-$200/st FOB in the region. Sources said Honeywell announced on Feb. 10 that it was not accepting new orders for granular and mid-grade ammonium sulfate until further notice due to a “current backlog of orders.”
Western Cornbelt: The granular ammonium sulfate market was reported in a broad range at $150-$200/st FOB last week, with the low in Missouri and the upper end reflecting new dealer list pricing in Iowa from some suppliers.
California: Ammonium sulfate pricing was down from last report at $275-$280/st FOB in the state.
Pacific Northwest: Granular ammonium sulfate was reported at $210/st DEL in the region, give or take.
Western Canada: Granular ammonium sulfate remained at $350-$355/mt DEL in the region.
U.S. Imports: December imports were off 20 percent, to 25,215 st from the year-ago 31,583 st. July-December imports were off 12 percent, to 162,100 st from 184,751 st.
PHOSPHATE
Central Florida: Corn, the fertilizer industry’s favorite crop, was on the minds and lips last week. How much would be planted? A couple of sources said it would likely be between 82 million and 89 million acres, and the answer will have a major impact on phosphate sales for the spring season. The price has been relatively stable at around $4/bushel and the price of fertilizers was far below the previous year, so it was more a matter of the corn market. Some will go to traditional customers, such as feeding the world, but a big chunk would have to go to ethanol. One hopeful source said he believes the new administration and its green agenda will promote the use of ethanol. After all, President Obama is from Illinois, a major corn-producing state, and it seemed likely that would happen.
Sulfur suppliers to the phosphate industry said last week that deliveries have increased recently, and they believe production may be going up. Phosphate sources said that was true, but only to a small degree. With a recent splurge in sales, inventory has dropped and replacement material was being produced, but the industry was still well below normal. In its recent earnings release, CF reported that its Plant City phosphate processing plant operated at 85 percent capacity during the fourth quarter, but scaled back to 40 percent at the beginning of the year.
Phosphate sales were actually happening in Florida last week but most were done under a formula basis. The Central Florida DAP price range remained at $305-$315/st FOB, based on recent sales. CF was said to be asking $310/st FOB for DAP and $330/st FOB for MAP. PCS Sales had no published price. Mosaic had no posted price for Central Florida, but was said to be selling at $305-$315/st FOB, and up to $330/st FOB for MAP. The lowest prices were for big buyers, while dealers could expect to pay as much as $50-$60/st FOB more. The price from Agrifos was $350/st FOB for trucks and $340/st FOB for rail shipments.
U.S. Gulf: Areas supplied by the Arkansas River finally got some much-needed rain last week– more than two inches at Tulsa – but the package included some deadly tornadoes. Barge supplies on the Arkansas were said to be slow last week, as activity at warehouses was picking up and product was moving out. Sales of phosphate and urea were brisk, but potash was minimal. DAP barges from New Orleans to Rosedale were not a problem, but the pick-up at Rosedale included a wait of several days.
Warehouse prices continued to hold up well in relation to barge cost, and DAP was bringing as much as $360/st FOB on the Arkansas and $350-$355/st FOB on the Illinois. Some areas were seeing DAP prices as low as $330/st FOB.
The logjam of NOLA DAP barges on the river system eased significantly during the past few weeks after Mosaic’s recent spate of sales. Inventories in general were declining as dealers began refilling empty bins. The season will probably be closer to average than earlier anticipated, said sources, if activity in Oklahoma was an indication. As interest in buying fertilizer has begun to increase on the gulf and river system, the rest of the world was also getting back into the game. Mosaic has restarted its ammonia plant at Donaldsonville and DAP production was increasing, although still far below capacity. Processing plants will begin to return to something more like normal capacity once demand becomes steady and inventories decline to a reasonable level.
Last week, MAP, which was somewhat scarce, was selling at a premium of about $15/st FOB to DAP. There was no change in prices, as prompt NOLA DAP barge prices were running from a low of $310/st FOB to $315/st FOB last week, but most were $315/st FOB by the end of the week. MAP barges were done at $330/st FOB.
Eastern Cornbelt: DAP out of regional river terminals was quoted in the $355-$370/st FOB range last week, with MAP $15/st higher. Inland warehouse prices remained as high as $400/st FOB for DAP and $415/st for MAP in some locations. Sources said MAP sales have picked up, and supplies out of some river locations were low.
10-34-0 continued to be quoted in a very broad range at $650-$900/st FOB in the region.
Western Cornbelt: DAP was quoted at $360-$370/st FOB most regional warehouses to the dealer. MAP had reportedly moved to a $15/st premium to DAP, and was in tight supply at some locations. “We can’t keep it in,” said one Missouri supplier about MAP inventories in early February. Several sources said they think dry phosphate inventories will tighten up quickly when movement begins in earnest.
The 10-34-0 market continued to be quoted in the $600-$675/st FOB range in the region, with the low in Nebraska and the upper end in Iowa. One Missouri source pegged the dealer market firmly at the $650/st FOB level last week.
California: Effective Feb. 1, Simplot raised its phosphoric acid postings by 50 cents to $10.50/unit DEL in California for both superphosphoric acid (SPA) and merchant grade acid (MGA), with the latter also posted at $10.70/unit FOB the warehouse. Agrium’s February pricing levels remained at the $1,000/st rail-DEL mark in the region for both SPA and MGA.
MAP and DAP were unchanged at $455-$460/st DEL or FOB warehouse. Simplot’s list price for 0-45-0 TSP with Avail was steady at $425/st rail-DEL or FOB French Camp. The 16-20-0 market was quoted at $320-$327/st FOB.
10-34-0 pricing was pegged at $470-$480/st FOB in California, up slightly from last report, with the low in the Central Valley and the high in desert locations.
Pacific Northwest: MAP remained at $445-$455/st FOB or DEL in the region, with DAP in roughly the same range. 16-20-0 was steady at $300-$305/st DEL, with dealer postings reported as high as $335/st FOB from some regional suppliers. Simplot’s reference prices for TSP with Avail were in the $420-$425/st FOB range in the region.
10-34-0 pricing was up from last report, with sources tagging the dealer market at $465-$495/st FOB in the region.
Simplot hiked its SPA and MGA postings by 50 cents on Feb. 1, bringing reference levels to $10.50/unit DEL in the region. Agrium’s postings reportedly remained at $1,000/st rail-DEL for both SPA and MGA.
Western Canada: MAP was unchanged at $790-$825/mt DEL to the dealer in Western Canada.
U.S. Export: Vietnam made two buys from the U.S. last week, 30,000 mt of DAP each from Keytrade and Transammonia, for a total of 60,000 mt at a price that worked out to $360/mt FOB, slightly up from the previous export sale price of $358/mt FOB.
Although India announced its purchase of 1.2 million mt from Russia a couple of weeks ago, it will still need additional tons this year. It did reach an agreement with Morocco on phosphoric acid, but that will not be sufficient to meet its needs.
Ethiopia purchased 200,000 mt of DAP, but the source and the price were not available. Europe was buying last week, and although the phosphate was coming from Russia and Lithuania, that does help reduce the world’s supply and open future markets.
Brazil and Argentina were showing interest last week and will probably be in the market sometime soon.
TFI reported a discrepancy with the U.S. Department of Commerce on the number of tons of MAP exported since 2005. For 2008, TFI said 1.46 million st, while the DOC reported 2.74 million st.
Based on the sales to Vietnam, the export DAP price range increased from a flat $358/mt FOB previously to $358-$360/mt FOB last week. Exports should increase during the next few months.
India: Indian buyers are claiming they have officially broken the “cartel” on phosphoric acid prices. As a result, prices are being called $730-$760/mt DEL. Reportedly, the new levels have been achieved by Coromandel with Groupe Chimique Tunisien and Foskor of South Africa, as well as by Zuari Industries with OCP. The $730/mt number is reportedly for cash with the $760/st 150-day credit.
POTASH
Eastern Cornbelt: Potash was quoted at $700-$800/st FOB regional warehouses, depending on grade and location, with the lower numbers reported in Illinois. Few new sales were reported to test those levels, however.
Western Cornbelt: Potash out of regional warehouses was tagged in the $700-$740/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. Interest remained low at both the wholesale and retail levels. “We’re moving one load of potash for every 25 loads of MAP,” said one regional supplier.
California: Muriate of potash pricing remained at $849-$875/st FOB and $875-$900/st DEL in the region.
Sulfate of potash was quoted at $1,015-$1,055/st FOB for bulk quantities, with the low for standard grade, the high for water soluble, and bulk granular SOP reported at the $1,028/st FOB mark.
Potassium nitrate remained at $1,310-$1,380/st FOB in the state, with the low for bulk and the upper end for bagged product.
Pacific Northwest: Potash remained at $854-$900/st DEL in the region, with FOB warehouse levels quoted in the $840-$890/st range. Sources reported few new sales taking place, and one source said potash consumption will be off considerably this spring in his trade area.
Western Canada: Reference prices for potash remained at $988/mt FOB Saskatchewan mines to Canadian customers. No updated delivered prices were reported for the region last week.
U.S. Imports: Imports were off 19 percent in December, to 711,286 st from the year-ago 873,265 st. July-December imports were up 22 percent, to 6.4 million st from the year ago 5.27 million st.
SULFUR
Tampa: Phosphate producers in Florida were taking more sulfur than they have since November, according to sources, but the amount was still well below normal. Inventories of DAP and MAP were declining last week as dealers began filling bins for the spring season, and offshore customers were starting to buy once more. That’s not just good news for the phosphate industry, but for sulfur producers as well. The oversupply situation has not really improved much, but at least it has not gotten worse in the past week.
Some refineries were doing turnarounds last week, which helped reduce sulfur supplies and push up prices at the pump.
Prill was moving out of Beaumont and inventories there were half or less than half of Martin’s 150,000-mt capacity last week. Three or four vessels will be loaded and shipped from Beaumont in February/March, which helps eat up the inventory.
West Coast: Negotiations for first-quarter contract prices for sulfur were still ongoing last week, and already-low prices may decline a bit more.
U.S. Imports: Imports were off 53 percent in December, to 77,999 st from the year-ago 165,108 st. July-December imports were up 13 percent, to 1.15 million st from 1.02 million st.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 39.20 | 36.12 | 62.82 |
| CF Industries | CF | 55.05 | 52.44 | 113.06 |
| Intrepid Potash | IPI | 23.38 | 22.45 | N/A |
| Mosaic | MOS | 43.05 | 41.35 | 100.41 |
| PotashCorp | POT | 86.09 | 85.92 | 149.28 |
| Terra Industries | TRA | 24.67 | 23.22 | 45.03 |
| Terra Nitrogen | TNH | 127.82 | 122.50 | 112.72 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 15.57 | 17.09 | 45.39 |
| Deere & Co. | DE | 37.30 | 39.64 | 84.85 |
| Scotts | SMG | 34.03 | 34.13 | 38.01 |
SPOT BARGE PRICES
CF bid for Terra turns hostile; company to nominate three to Terra board
CF Industries Holdings Inc. said Feb. 3 that it is moving ahead with its plans to merge with Terra Industries Inc. CF gave notice to Terra, in accordance with Terra’s bylaws, that it will nominate independent directors to replace three members of Terra’s board of directors at Terra’s 2009 annual stockholders meeting. Terra said last week that it has not yet set the date for this meeting. The 2008 meeting was held in May.
CF also intends to commence an exchange offer for all of the outstanding shares of Terra common stock at a fixed exchange ratio of 0.4235 CF shares for each Terra share. CF expects to commence the exchange offer mid-month. CF shareholders would own 53 percent of the new entity, versus 47 percent for Terra. The deal is valued at $2.1 billion.
“We believe this is the best way to advance this transaction,” said Stephen Wilson, CF chairman, president, and CEO. “While we believe the Terra stockholders will support a combination by voting for our nominees, our preference continues to be to enter into a negotiated transaction. We are confident that our offer represents full and fair value, and continue to believe that a combination of the two companies would provide significant benefits to both CF Industries and Terra constituents. Our proposal has been received very positively by the market.”
CF nominees include John N. Lilly, former CEO of The Pillsbury Company; David A. Wilson, president and chief executive officer of the Graduate Management Admission Council and former managing partner at Ernst & Young LLP.; and Irving B. Yoskowitz, former executive vice president and general counsel of Constellation Energy Group Inc., and of Baltimore Gas & Electric Co.
Terra wasted no time in responding to CF’s plans. It said CF submitted a slate of nominees in an attempt to advance its unsolicited proposal to acquire Terra. Terra noted that as announced on Jan. 28, 2009 (GM Feb. 2, p. 1), Terra’s board, with the assistance of its financial and legal advisors and after a comprehensive review, unanimously concluded that CF’s proposal does not present a compelling case to create additional value for the shareholders of either company, and that it substantially undervalues Terra on an absolute basis and relative to CF. Since then, Terra said many of its major shareholders have expressed to Terra their disinterest in CF’s proposal and their support of Terra’s strategy. Terra said its board and management remain committed to enhancing shareholder value by continuing to execute the strategic plan that they believe will deliver significantly more value to shareholders than CF’s proposal.
Terra said its board is composed of eight highly-qualified directors, seven of whom are independent. At Terra’s 2009 annual meeting, three directors will be elected to serve a three-year term. Terms for three Terra board members – Martha Hesse, Henry Slack, and Dennis McGlone – expire in 2009.
Terra said it plans to file with the Securities and Exchange Commission and mail to its shareholders a proxy statement in connection with its 2009 annual meeting.
Terra said the exchange offer announced by CF has not yet commenced, and this communication is neither an offer to purchase nor the solicitation of an offer to sell any securities. At an appropriate time, and if the exchange offer is commenced, Terra intends to file a solicitation/recommendation statement with respect to the exchange offer with the SEC.
TFI conference draws big crowd to sunny San Diego
Some 580 industry representatives gathered in San Diego Feb. 2-5 for The Fertilizer Institute’s 2009 Fertilizer Marketing Business Meeting. Attendance was down slightly from last year’s record turnout due to the ongoing economic crisis and tighter travel budgets for some companies, but those who were on hand enjoyed perfect weather and an idyllic water’s-edge setting at the Manchester Grand Hyatt.
Unlike the weather, market indications were less than certain for conference-goers. “Some are doom and gloom, and others are taking a longer view,” said one attendee. “There are opportunities in either an up market or a down market. You just have to figure out what those opportunities are.” Added another source, “Everyone is focused on getting through this spring, emptying out the system, and starting over.”
One of the more visible casualties on the scheduled attendee list was Fox News Sunday host and veteran broadcast journalist Chris Wallace, who was scheduled to address the Tuesday breakfast session. Wallace cancelled at 3 p.m. on Monday because the conference appearance conflicted with an opportunity to interview President Obama.
Ruben Navarrette Jr., an editorial writer with the San Diego Union-Tribune and a native of California’s San Joaquin Valley, stepped in to take Wallace’s place. Navarrette is a nationally syndicated columnist with the Washington Post Writers Group, and his twice weekly column appears in more than 175 newspapers.
Navarrette said Americans are tired of polarized politics and hard-line ideology. He described the Patriot Act as an example of overreaching by the Republicans in the wake of 9/11, but said the nearly $900 billion economic stimulus plan may be overreaching by Democrats. “There is no quick fix,” he said about the current financial crisis. “We didn’t come into this crisis overnight, and we’re not going to get out of it overnight.”
Navarrette said he was glad to work “outside the bubble of Washington D.C., where journalists tend to all think alike.” He addressed the issue of media bias, claiming many journalists will likely feel an obligation to be supportive of President Obama because they’ve “staked their flag on the Obama presidency.” He had equally harsh words for some of President Obama’s most vocal critics, however, namely certain conservative radio talk show hosts who suggest that an Obama presidency means “white males are the new endangered species.”
Navarrette said he is “optimistic that [Obama] is a very intelligent, hard-working president who is hitting the ground running.” He warned, however, that the Democratic majority leaders in Congress may prove to be Obama’s biggest obstacle. “Don’t be surprised if he’s stabbed in the back by his own party,” Navarrette said, noting that on issues such as immigration reform and tax cuts, there is “plenty of room on the left for those who supported Obama to be disappointed.”
Tuesday’s breakfast session featured a keynote address from former congressman Charlie Stenholm, who represented Texas in the U.S. House of Representatives from 1979 to 2005 and was one of the so-called “Blue Dog Democrats.” Stenholm outlined six challenges facing agriculture: the food vs. fuel debate, technological development, food safety, trade, immigration policy, and animal rights.
On the food vs. fuel issue, Stenholm said the days of cheap energy are over. “We need all the energy we can possibly produce in this country, and I mean all,” he said. He complained, however, that the corn ethanol industry built too many plants where the corn is and not where the demand is.
Stenholm said the Obama administration “will utilize sound science” in policy decisions. “We cannot possibly feed the world without the utilization of technology and biotechnology,” he said.
Referring to immigration policy, Stenholm said building a fence on the border “makes no sense,” and cautioned that U.S. agriculture would “come crashing down” if immigration policy reform is too sweeping and rigid. “Seventy percent of the work force in agriculture is undocumented,” he said. “They are here doing the things they want to do and that we want them to do.”
Stenholm warned that animal rights organizations such as the Humane Society and PETA “have convinced a lot of people that those of us in agriculture treat our animals badly.” He said 99.9 percent of those in animal agriculture “do a pretty good job,” but the animal rights movement is winning and it is not in the best interest of agriculture.
Both Navarrette and Stenholm closed their speeches with words of advice for conference attendees. “It has never been more important to stay clued in,” said Navarrette. “Grab on to whatever media you can, and learn to talk about politics again with civility.” Stenholm advised the industry to “do what you’ve always done: think big.”
EPA raises concerns about new Idaho fertilizer plant
In a letter to the Idaho Department of Environmental Quality (IDEQ), an Environmental Protection Agency (EPA) official outlines five concerns EPA has regarding Southeast Idaho Energy’s draft permit to construct a coal gasification fertilizer plant near American Falls in Southeast Idaho.
The Nov. 18 letter from Richard Albright, EPA air, waste and toxics director in Seattle, to Martin Bauer, IDEQ’s air quality division manager in Boise, addresses the proposed plant’s new source performance standards, potential to emit, Best Available Control Technology (BACT), mercury, and slag. Albright noted IDEQ and EPA Region 10 staffers have discussed the $1 billion project.
“The EPA’s comments are being addressed along with public comments submitted during the comment period. Typically, the permit will be revised as needed in response to all comments, and a response to comments will be issued with the final permit,” said Cheryl Robinson, IDEQ air quality engineer/modeling analyst in Boise.
“When all comments have been addressed and any needed changes have been made to the permit, DEQ will make a determination whether the changes are significant enough to schedule a second public comment period. If another public comment period is not needed, DEQ will issue the final permit accompanied by a Response to Comments document,” Robinson said. IDEQ expects to make a decision in early 2009.
Southeast Idaho Energy (SIE) spokesman John Burk said his company’s project is environmentally, financially, and technically sound. SIE, a subsidiary of Refined Energy Holdings of New York, still hopes to break ground in late 2009.
SIE proposes to use a Selexol unit to remove hydrogen sulfide from its synthetic gas stream, strip the H2S from the Selexol solvent, and send it to the sulfuric acid production unit. In its letter, EPA says SIE’s sulfuric acid production unit contemplated for the project cannot be considered a control unit and should be required to comply with sulfuric acid plant performance standards.
While it appears the plant’s nitrogen oxide and particulate emissions will be marginally below federal thresholds, EPA recommends that IDEQ require SIE to perform a detailed analysis or provide adequate monitoring, record keeping, and reporting to ensure those air pollutants stay within regulations.
Albright wrote it appears IDEQ relied entirely on SIE’s analysis for Best Available Control Technology for the project, failing to adhere to EPA’s five-step, top-down process. “In addition, it appears that the cost effectiveness analysis may have been performed incorrectly,” the letter stated, recommending that IDEQ rigorously ensure accurate BACT determinations and correct those that need to be updated.
EPA also stated it is concerned the magnitude or impact of new mercury emissions from the plant to the surrounding area has not been sufficiently addressed. It noted fish tissue samples taken from the American Falls Reservoir and Portneuf River show elevated levels of mercury contamination. A Michaud Flats Superfund site has been designated east of American Falls and west of Pocatello, where the J.R. Simplot Co. and FMC Corp. have operated phosphate processing plants.
Albright pointed out that EPA has initiated a region-wide mercury strategy to address unregulated atmospheric sources. It plans to work with states, tribes, and individual companies to develop voluntary agreements to reduce mercury emissions through pollution prevention and waste partnerships.
EPA also recommended that the SIE plant’s coal feedstock and slag be analyzed for potential problem contaminants before SIE develops market plans to sell slag as a byproduct for roads or landfill disposal.
Gasifying an expected 2,000 st of coal daily, the plant would produce anhydrous ammonia, granular urea, UAN, and sulfuric acid. An estimated 1,000 construction workers would be employed on the project. When the plant is running, about 150 full-time employees would work there.
Rocky Mountain updates phosphate, vanadium estimates
Rocky Mountain Resources Corp., Vancouver, has updated resource estimates for phosphate and vanadium at the Paris Hills Project near Paris, Idaho. “The resource estimates for Paris Hills are truly exciting news,” said Tom DeMull, Rocky Mountain president. “The phosphate mineral resource estimate exceeds our expectations for this stage of the project and could form the foundation for a 50 to 75 year operating life. The existence of a near-surface, high-grade zone of phosphate rock is another pleasant surprise. Our immediate priority will be to develop plans to investigate this high-grade zone as a starter operation to produce quick payback and cash flow that could fund long-term project development.”
The current work has identified a near-surface, high-grade subset of the estimated phosphate rock resource that could potentially be mined and direct shipped as feed to a phosphoric acid plant. The high-grade zone contains an estimated 4.6 million tons at 29 percent P2O5. It appears in both in the Upper and Lower Phosphate Beds in the southeastern quadrant of the property. The immediate focus of the company will be to develop plans to further investigate the high-grade zone as a potential starter operation to produce cash flow to fund the long-term project. The current resource estimates are based on historical drilling of 34 holes, as well as five holes drilled by the company.
The vanadium bed lies immediately beneath the Upper Phosphate Bed; in addition to vanadium, it contains 9.7 percent P2O5. The vanadium bed is being evaluated as a potential co-product project, to be mined in conjunction with phosphate from the Upper Bed, with shared costs.
The company estimates the long-term price for phosphate rock in the range of $100-$150 per ton based on content of 29 percent P2O5. Vanadium, which is used in strengthening steel, is given price projections of $5.90 per pound V2O5.
The recent compilation was to support preparation of an NI 43-101 Technical Report for the Paris Hills Project. The full report is expected to be filed 45 days after Jan. 20. The company says the development of the project into a mining operation will require the receipt of environmental permits and arrangements to market the mineral commodities produced.
Rocky Mountain is an industrial metal and minerals exploration and development company focused on development and production.
Plant Nutrient results pull down The Andersons; $97.2 M of inventory write-down
The Andersons Inc. posted a net loss for the fourth quarter ending Dec. 31, 2008, with much of that attributed to the company’s Plant Nutrient Group. The fourth-quarter net loss was $33.4 million ($1.85 per diluted share) on sales of $770.1 million, versus the year-ago net income of $23.5 million ($1.28 per share) and $784.6 million, respectively. Full-year results were $32.9 million ($1.79 per share) on sales of $3.49 billion, versus 2007’s $68.8 million ($3.75 per share) and $2.38 billion. The 2007 results include a one-time $7.7 million gain.
“Although our full year earnings could be reviewed as respectable versus history, since they are our third best historical performance, this is overshadowed by the fact that I am deeply disappointed in our fourth quarter results – we could have done better,” said President and CEO Mike Anderson. “The decline in our results was largely a result of the inventory and contract adjustments within our Plant Nutrient Group. I want our shareholders to know that we are taking a hard look at the risk management processes in that group and fully intend to make improvements that we believe will reduce the likelihood of similar events in the future.”
The company said its full-year results were heavily influenced by significant pre-tax inventory and contract adjustments of $97.2 million within the Plant Nutrient Group. The company said it will continue to monitor the fertilizer market and could further adjust the value of its year-end inventory if significant price appreciation or depreciation occurs prior to the filing of its 10K in late February. However, it noted that market prices have recently stabilized and that the existing write-down may account for most, if not all, of the adjustments.
The Andersons said going into the fourth quarter, Plant Nutrient Group volumes were only slightly behind the prior year. However, fourth-quarter volumes dropped by 50 percent. The unit’s fourth-quarter operating loss was $74.5 million on sales of $111.5 million, versus the year-ago operating income of $8.7 million and $140 million, respectively. Inventory adjustments taken in the quarter were $84.1 million. The unit had a full year operating loss of $12.3 million on sales of $652.5 million, versus 2007’s income of $27.1 million and sales of $466.4 million.
“Clearly our full year earnings were heavily influenced by the results within our Plant Nutrient Group,” said Anderson. “The reduced earnings were also partially attributable to the economics in the ethanol industry and reduced income from our investment in Lansing Trade Group. On a positive note, both our Grain Division and Rail Group had great years. Also, our propriety product strategy with the Turf & Specialty Group is proving to be successful. In addition, we made wise and timely decisions early in the year to improve our capital structure and liquidity of the company.”