Sunnyvale, Calif.-Trimble said Dec. 4 that it has acquired the assets of privately-held Rawson Control Systems, Oelwein, Iowa. Rawson, founded in 1970, manufactures hydraulic and electronic controls for the agriculture equipment industry, including variable rate planter drives and controllers, variable rate fertilizer controllers, mechanical remote electric control valves, and speed reducers. Rawson’s products work in conjunction with the Trimble® FieldManager?äó Display, which monitors and controls up to four inputs such as seed, fertilizer, and crop protection. “We are excited to add the Rawson line of drives, controllers and complementary products to our flow and application control solutions portfolio. Rawson is a leader and their products are affordable, simple to use and accurate,” said Erik Arvesen, general manager for Trimble’s agriculture division. Rawson will be part of Trimble’s ag division. Trimble, founded in 1978, has a worldwide presence, with more than 3,800 employees in over 18 countries.
All posts by traceybg@gmail.com
PotashCorp earns multiple CICA top honors
Saskatoon-PotashCorp won three awards of excellence in the 2008 CICA Corporate Reporting Awards from the Canadian Institute of Chartered Accountants. They include: Award of Excellence in the Mining Category for its 2007 Annual Report, placing first in the category; Award of Excellence in Electronic Disclosure, placing first among all categories; and the Award of Excellence in Sustainability Reporting, placing first among all categories. “With the market turmoil the world has experienced in recent months, we cannot underestimate the importance of transparency in helping build and retain the trust of our many stakeholders,” said Denita Stann, director, investor relations. “By providing insight into our strategies, our successes and even our shortcomings, we reduce uncertainty and increase our ability to gain their long-term support. That also helps raise the value of our company.” PotashCorp received the Award of Excellence for its Annual Report in 2007 and was given honorable mentions for electronic disclosure and sustainability reporting. PotashCorp won CICA’s Overall Award of Excellence for an unprecedented three consecutive years from 2004-2006. The CICA Corporate Reporting Awards are open to the top 50 companies per industry sector listed on the TSX as of March 31, 2008, with a market cap of over $200 million and incorporated in Canada. The judging groups include the CICA, the Toronto CFA Society, the Canadian Investor Relations Institute, and the International Institute for Sustainable Development.
Canadian fertilizer panel makes gains
Ottawa-The Canadian Fertilizer Products Forum (CFPF), formed two years ago to help improve the fertilizer and supplements regulatory system for agriculture producers and stakeholders, has declared “mission accomplished,” but still plans to continue its efforts on a lower level. CFPF was launched in the fall of 2006 to provide a forum for stakeholder input into the regulatory process for fertilizers and supplements, bringing together producer groups, industry representatives, nongovernmental organizations, and regulatory officials from across the country to recommend improvements. “The Canadian regulatory system provides a strong foundation for the fertilizer and supplement industries founded on a science-based approach for all products,” said CFPF Executive Director Clyde Graham. “The CFPF was launched because while the system worked, there was still room for improvement. The result of this project has been positive for both farmers and industry.” Wendy Omvlee, member of the CFPF executive committee, added, “The CFPF was able to make improvements to the current system to ensure that farmers have better access to a variety of high-quality fertilizers and supplements in a timely fashion. We still have work to do and will continue working toward additional regulatory improvements in the coming months.” While winding down its government-funded project preparing its final report to Agriculture Canada next month, CFPF will continue at a reduced level of activity. The Canadian Fertilizer Institute will maintain the website and member database, assist with updates to members, organize several yearly executive committee meetings, and assist in organizing an annual conference.
U.S., Canada focus on phosphate pollution
Burlington, Vt.-A commission of U.S. and Canadian officials will meet Dec. 15-16 to begin the search for land sources of phosphorous pollution in Lake Champlain’s Missisquoi Bay. Missisquoi Bay is sometimes plagued with toxic, summer algae blooms allegedly fed by fertilizer runoff into the lake from farm fields, lawns, and streets. Millions of dollars invested by Vermont and Quebec to help farmers prevent pollution have not improved water quality, and Missisquoi Bay has one of the highest phosphorus concentrations of any part of Lake Champlain. The commission in a 2005 report identified the water quality status in Missisquoi Bay as an urgent matter of binational concern and recommended that the two federal governments take the necessary steps, individually and jointly, to assist in reducing phosphorus levels. According to the report, phosphorus loads and ambient levels greatly exceed the target levels established by the provincial and state governments. Written comments may also be submitted by Jan. 5 at either the U.S. section secretary for the International Joint Commission, 2401 Pennsylvania Avenue, NW, Fourth Floor, Washington, DC 20440; by fax at 202-254-4562; or via email at Commission@washington.ijc.org, or to the Canadian section secretary, 234 Laurier Ave. West 22nd Floor, Ottawa, ON K1P 6K6; by fax at 613-993-5583; or via email at Commission@ottawa.ijc.org.
Management Briefs
Truth Industries LP has announced that Dan Russell has been named president of the company effective immediately. He will report directly to Joe Newcomb, chairman and CEO. Dan previously held the position of executive vice president.
Market Watch
AMMONIA
U.S. Gulf/Tampa: The Tampa ammonia market crashed last week to $125/mt DEL for December, down $225 from November’s $350/mt DEL. Many last week were left with their jaws dropping in amazement. One source said the drop certainly got the industry’s attention, and several said it likely means that more curtailments are on the way.
It was just back in July of this year when the market was $931/mt and sellers were awaiting a jump to the $1,000 mt mark. Ironically, prices have been so high and are now so low it made one wonder if prices had ever been so low. However, they have. Back in 2002, Tampa prices were lower, according to the Green Markets Historical Database.
Sources speculated that the new Tampa low was prodded by new business by Koch from Venezuela to Turkey. Sources say the new Tampa business puts the Caribbean as low as $75-$80/mt FOB.
The $125/mt Tampa, and an already reported $250/st FOB NOLA barge, had many wondering last week if producers could make production costs. At least in Trinidad gas prices and other costs would be lower, but gas prices, while weaker in the U.S., are not that weak. Sources say there will be continued pressure on NOLA to drop further. In addition to a full supply chain and reluctant ag buyers, sources note that industrial buying is off as well. Sources said a build-up in ammonia inventories is much of the problem, adding that even if it is cost effective to still produce ammonia, there is little need to do so if storage space is full. This gives producers another reason to curtail. Sources speculated that this may have been one of the reasons The Mosaic Co. stopped producing ammonia at Faustina, La.
Market watchers are particularly eyeing two major producers, Terra and CF, for word of production curtailments. However, as of mid-week neither company reported new curtailments. Sources were particularly awaiting news of whether Terra would take down its Donaldsonville, La., plant, which just came up in late summer. Such a move might be hard to swallow, said one source, noting that Terra had to spend a lot of money to bring up the long-idled plant.
Agrium Inc. has shut down its Fort Saskatchewan, Alberta, nitrogen complex for repairs, and it is expected to be down through the end of December. Ammonia capacity at the complex is 535,000 mt/y. As earlier reported, its Redwater I plant, with an annual capacity of 280,000 mt/y, is already down. In addition, Agrium’s Borger, Texas, facility is reported to be producing at only 75 percent of capacity.
Another market watcher said producers, not just ammonia producers, need to curtail for another reason ?Çô existing inventories in the heartland. Those need to be depleted, hopefully at higher prices, without a glut of new production waiting in the wings to put even more pressure on prices to go down. In other words, let farmers draw down high-priced inventories first (preferably at the high price); then once those are gone, start up production. That may be easier said than done, as not everyone on the selling side may be willing to play the waiting game.
Eastern Cornbelt: Dealers were lamenting the narrow window for fall ammonia work. While activity picked up quickly in late November, wintry weather conditions in early December put a stop to fieldwork in most locations. Northeastern Illinois and northern Indiana were hit with lake-effect snow early in the week, and another round of storms was expected to drop up to 5 inches of snow across northern Illinois on Wednesday and Thursday. Sources reported rain and high winds in southern Indiana at midweek.
Sources continued to quote the spot ammonia market at $650-$700/st FOB regional terminals, with the low in Illinois for limited spot sales. Forward contract ammonia for January through May continued to be referenced as high as $1,015-$1,025/st FOB regional terminals.
Western Cornbelt: The onset of winter weather quickly slowed field activities. Several sources noted that fall applications of ammonia, which had picked up in late November once the bulk of harvest was complete, were tapering off as the inclement weather moved in.
Anhydrous ammonia continued to be quoted at $475-$540/st in the region from southern production points. Out of regional terminals, the spot market was pegged at $450-$550/st FOB, with the low in Nebraska. Reference prices for forward contract tons for the January-May shipping period remained as high as $1,010-$1,020/st FOB.
California: Effective Nov. 21, Agrium’s truck-DEL anhydrous ammonia postings dropped to $755/st in Central California and $760/st in Northern California. Calamco adjusted its anhydrous ammonia postings on Nov. 20, with new reference levels dropping to $755/st truck-DEL and $800/st rail-DEL in the California market. Those levels compared with Oct. 27 postings at the $825/st truck-DEL and $870/st rail-DEL level, and Oct. 12 list prices at $1,025/st truck-DEL and $1,060-$1,070/st rail-DEL.
Calamco’s aqua ammonia price dropped on Nov. 20 to $185/st FOB in California, down from the Oct. 27 posting of $216/st FOB.
Pacific Northwest: Anhydrous ammonia continued to be quoted by Washington sources at $900-$940/st DEL for the last business, with minimal new sales to test the market. One supplier was offering forward contract ammonia at $1,020/st FOB Ritzville, Wash., for the January through May shipping period.
Western Canada: Anhydrous ammonia remained at $1,584-$1,629/mt DEL in the region for the last confirmed business, with no new sales to test the market.
Black Sea: For people who like to do math, the price in Yuzhnyy should be $45-$50/mt FOB. But no one could point to anything less than $220/mt FOB. The ultra-low number of $50/mt FOB comes from calculating a Yuzhnyy equivalent price based on the latest deal in Tampa of $125/mt CFR.
Sources report some top-off tons were purchased at $230/mt FOB, but one Asian source said that is a one-off price too high for any other market. Asian sources peg the market at a stable $200-$230/mt FOB. The problem, said one trader, is that even at these low prices, no one is making any serious bids.
Demand around the globe is falling off as industrial buyers fail to line up the necessary credit to keep their businesses running and as consumers cut back on their end-use purchases. The lack of demand and dropping price has reportedly pushed all the Ukrainian producers to shut down or reduce production to the bare minimum. Getting confirmation as to what plants were actually shut down and what plants are operating at a reduced level is difficult. Asian sources say the names and conditions of the plants change almost daily.
Also hurting the Ukrainian producers are repeated reports that Russia is ready to raise the price of natural gas unless all outstanding debts are covered. One rumor says the price of the gas will double come Jan. 1.
What is clear, said one observer, is that the combination of reduced demand for ammonia, falling prices, and increased inputs has pushed many factories to or below their production costs.
Middle East: The last bit of business was the reported Transammonia-Qafco-KIP-IFFCO deal that pushed prices down to $160/mt FOB.
Sources say Indian buyers continue to need tons, but are not so desperate that they have to take their cargoes at any cost. Buyers are leaning heavily on their agents to get the price down even further.
The top end of the market is gone. Sources now say the price is firmly in the $160s/mt FOB, with no end in sight to the steady decline.
Asia: Sources report demand for ammonia is down by 70 percent in the region. Industrial buyers are finding the consumers of their end products are not buying as they did just six months ago. The inability to find ready buyers is forcing industrial ammonia clients to cut back on their own production. The reduction in production, in turn, is reflected in reduced demand for ammonia.
Sources report that the current situation is the worst seen in years. Even during the Asian economic crisis of the late 1990s, one observer noted, end user demand was never this low.
UREA
U.S.Gulf: Early in the week many players were calling the market $230/st FOB and weak for prompt granular barges. However, after the news that Tampa ammonia dropped to $125/mt DEL, sources said some urea sellers became low price believers. As a result, later in the week sources said $210/st FOB had been done and that $200/st FOB was being bandied about for the next trade. Sources said prill prices ideas continue to be in line with granular.
Eastern Cornbelt: Granular urea was pegged at $325-$350/st FOB regional terminals to the dealer, although there was little new business to test the market.
Western Cornbelt: Granular urea pricing to the dealer was tagged at $310-$350/st FOB, with the low reported in Missouri and the upper end in Iowa. Forward contract tons for January were referenced at $335/st FOB Pine Bend, Minn., and $290/st FOB Inola, Okla.
California: The granular urea market was tagged at $450-$455/st FOB, and $450-$480/st DEL in the state last week. Agrium’s granular urea postings dropped on Nov. 20 to $455/st FOB West Sacramento, Calif.; $475/st truck-DEL in Central California; and $480/st truck-DEL in Northern California.
Pacific Northwest: The granular urea market was quoted at $385-$430/st DEL in the region, with the lower numbers in Montana. Agrium’s granular urea postings dropped on Nov. 20 to $400-$415/st DEL in Montana and Wyoming, depending on location; $425/st FOB warehouse locations at Glade, Kennewick, Warden, and Wilson, Wash.; $430/st DEL in Washington, Oregon, Idaho and northern Nevada; $440/st DEL in northern and central Utah; and $445/st DEL in southern Utah.
Western Canada: Granular urea pricing had reportedly slipped to $521-$546/mt DEL in the region, reflecting a drop of nearly $450/mt from last report.
Pakistan: Reports are circulating that TCP will call another tender as early as this week for 200,000 mt.
At first the call for a tender was mated with rumors that TCP scrapped the tender that closed Nov. 22. In the end, sources pointed to orders for vessels for shipments from Yuzhnyy to Pakistan as evidence the old tender results are being honored.
The rumors of a scrapped tender came as TCP – along with buyers in India, Sri Lanka, and Bangladesh – indicated it wanted lower prices in another round of talks.
The call for lower prices in an atmosphere of canceled tenders led several sources to flatly state the TCP tender was also scrubbed. Other traders, however, pointed to inquiries for vessels to load cargo in Yuzhnyy based on the results of the Nov. 22 tender. The Pakistan government announced that four vessels with a total of 104,000 mt will be berthing at the Gwadar port between Dec. 13-22.
The new tender is expected to call for delivery of material by the end of January.
And sources expect to see softer prices from Yuzhnyy and a firm push-back on low prices from the Middle East.
Middle East: Producers have no intention of letting the price go any lower, said one Asian trader. Area producers were willing to drop to $260/mt FOB in the MMTC/India tender, but only after a lot of heated discussions. That price represented a $2/mt drop, while the Yuzhnyy tons came off a lot more.
When TCP/Pakistan was negotiating lower prices from its Nov. 22 tender, Sabic switched its offer from $271/mt FOB to $274.85/mt CFR. The estimated netback on that deal was $265/mt FOB.
Asian traders see no desire by the producers or a need to lower prices. One source noted that each producer has plenty of storage space to ride out a slow buying season.
The announcement by China that it was reducing its export duty to only 10 percent through January 2009 added to expectations that Middle East tons would go for less in order to stay competitive. But so far the lower Chinese price does not seem to have played the price-softening role it did in the past.
If producers can resist further price reductions until February 2009, sources say they should be able to slowly start raising prices again.
By February, the Chinese export duty will jump to 110 percent.
Until new business is set, sources say the price in the area remains $261-$265/mt FOB based on the Indian and Pakistani tenders.
India: Sources report agents for IPL and MMTC are talking to traders and producers to nail down some prices for a possible upcoming tender. The pre-tender talks have become a staple of doing business with the Indians in recent years.
Sources say, however, the scrapping of the MMTC tender, even after extensive negotiations, left a sour taste in the mouths of suppliers. Still, said one source, it is inconceivable that anyone would stay away from potential business talks with India.
Industry observers say India is still 500-600,000 mt short of its urea needs. At least two more tenders will need to be called before the end of the year to ensure the product needed arrives in time.
Black Sea: Traders are talking down the market price and producers are pushing back. Yet, said one Asian source, at the end of the day the producers will have to accept lower prices if they keep their plants running.
Reports of major shutdowns or reduced production throughout the region are already circulating. The uncertainty of who will be operating in the next two months is causing some traders to work out offers to potential buyers and then go looking for the tons.
In addition to the uncertainty by traders and buyers as to what plants will be running in the near-term, producers don’t want to keep a plant running to fulfill a tender award only to have that award ripped away at the last minute.
The price from the area is still pegged in the $220s/mt FOB. Sources say, however, the anticipated Pakistani and Indian tenders could show softer prices later this month.
China: Despite the lowering of the export duty to 10 percent, Chinese urea is not flowing out of the country as the planners had hoped. The overall downturn in demand has left Chinese producers with a problem faced by other producers around the world. And the solution the producers are using is also the same: shutdowns and cutbacks in production. Sources report the larger and more efficient urea producers have cut back production. The smaller plants are shutting down until demand picks up.
Asia: The Indonesian government is contemplating an export ban. Sources say the move is designed to ensure the domestic market is taken care of before any urea leaves the country. In recent weeks the government has stepped in to buy tons that were otherwise offered on the international market. The bidding prices were lower than the producers and government bean counters wanted, so the selling tenders were scrapped. The government bought the urea for local distribution.
All told, about 40,000 mt was taken from the global market. Sources say the removal of essentially one cargo is insignificant when compared to the world supply and demand.
Sri Lankan buyers have reportedly scrapped their tenders in the hopes of getting better prices.
Sources say the buyers should not expect better prices from any of the Middle East suppliers, but might see better offers from China or Malaysia.
Reportedly, MITCO is looking for buyers anywhere it can to move a growing reserve of granular material. The government reportedly stepped in last week to ease the storage problem. Sources said Malaysian farmers will now have to adapt to using granular.
NITROGEN SOLUTIONS
U.S. Gulf: Prices continued to sink, with players now calling barges $230-$250/st FOB ($7.19-$7.81/unit FOB) at best.
Eastern Cornbelt: The UAN-32 market was pegged at $9.75-$11.75/unit FOB range for spot market tons, although new sales were few. One supplier continued to reference forward contract UAN-32 for January at $420.80-$430.40/st ($13.15-$13.45/unit) FOB regional terminals.
Western Cornbelt: UAN was quoted $9.20-$11.00/unit FOB, with the low reported out of spot river locations in the region. On a forward contract basis for January shipments, reference prices were reported as high as $432/st FOB Pine Bend.
California: UAN-32 was quoted at $400-$413/st $12.50-$12.91/unit) FOB and $400-$440/st ($12.50-$13.75/unit) DEL in the state. Agrium’s UAN-32 postings dropped on Nov. 21 to $413/st ($12.91/unit) FOB Sacramento, Calif., $435/st ($13.59/unit) truck-DEL in central California, and $440/st ($13.75/unit) truck-DEL in northern California.
Pacific Northwest: UAN-32 pricing was down from last report, with the dealer market pegged at $11.00-$12.50/unit DEL in the region.
Western Canada: UAN-28 pricing dropped on Nov. 27 to $329-$345/mt ($11.75-$12.32/unit) DEL in the region, reflecting a drop of more than $200/mt from the previous level.
AMMONIUM NITRATE
U.S. Gulf: Product is now being called $300-$350/st FOB.
Western Cornbelt: Ammonium nitrate was reported at $400-$450/st FOB in the region.
California: No market was reported for ammonium nitrate in California. The CAN-17 market was pegged at $315-$335/st FOB in the state last week.
Pacific Northwest: Ammonium nitrate was quoted at $500-$525/st DEL in the region, down some $100/st from last report. CAN-17 was steady at $360-$365/st FOB.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate remained at $200-$210/st FOB or DEL in the region.
Western Cornbelt: Granular ammonium sulfate remained at the $200-$205/st FOB mark from most locations. Honeywell’s reference prices for prepay shipments completed Jan. 1 through July 10 for the Iowa, Missouri, Kansas, Nebraska, Illinois, Wisconsin, Minnesota, and Dakota region include granular ammonium sulfate at $210/st rail-DEL or FOB warehouse, and mid-grade sulfate at $190/st rail-DEL or FOB warehouse.
California: The ammonium sulfate market had reportedly dropped to $350-$385/st FOB in California, reflecting another drop from last report.
Pacific Northwest: The ammonium sulfate market was quoted at $270-$305/st DEL in the region, down considerably from last report. Agrium’s granular ammonium sulfate postings dropped on Nov. 21 to $300/st FOB warehouses in Washington, Idaho, Oregon, and Nevada, and $305/st DEL in those states plus Montana and Wyoming.
Western Canada: Granular ammonium sulfate was quoted at $350-$355/mt DEL in the region, down some $200/mt from last report.
PHOSPHATES
Central Florida: Prompt phosphate sales out of Central Florida and from PCS Sales’ White Springs essentially stopped months ago, and last week production was following suit. Actually, that may have happened earlier.
PotashCorp confirmed last week that it has suspended all phosphate production at its White Springs, Fla., facilities to better match supply with demand for phosphate products. PotashCorp did not release specific plans on the length of its White Springs closure. CF has its Plant City facility down for a turnaround, and Mosaic has sharply curtailed production. CF, which has an annual capacity of about 2.3 million st of DAP/MAP, could take two weeks if the market was booming, but could be stretched out to six-eight weeks if it was in no big hurry.
Mosaic, which has three plants in Central Florida and one in Louisiana, may cut production by up to 2 million st by May 31, the company said last week. That was double the amount of the cutback announced earlier this fall. The company declined to reveal plant specific information. Mosaic has an annual production capacity of about 10.9 million st of DAP, or about 2.725 million st per quarter at all plants. Mosaic did not state the amount it planned per quarter, but most in the industry believe the market may find a pulse about midway through the first quarter, so it was possible – or even likely – Mosaic would make the bulk of its cutback earlier rather than later. One of its facilities was believed to have completely stopped production, and all others were being curtailed. Sulfur suppliers have said Mosaic has been taking less than half the amount of sulfur it agreed to under its contracts, which would be an indication of its current production. Earlier, Mosaic had indicated that the production curtailments would come mainly from its Florida operations.
Agrifos has cut production 30 percent. Their annual DAP capacity is 600,000 st/y.
There were reports that Miss Phos may have cut production by as much as 70 percent. This was not confirmed by the company, though it has said it would likely cut production in the fourth quarter. Annual capacity is approximately 900,000 st/y.
As for Central Florida postings, CF still had the lowest asking price at $490/st FOB. PCS Sales was holding at $1,070/st FOB. Mosaic had no posted price for Central Florida. The most recent price for Agrifos was $755/st FOB for trucks and $750/st FOB for rail shipments, but those will likely change once the market begins to move.
U.S. Gulf: Late last week, a trader made a sale of a NOLA DAP barge in the mid-Mississippi River at $375/st FOB. Earlier in the week, several sources said another barge was sold at $395/st FOB, which created a range based on actual sales.
That was both good news and bad. The good news was that some barge transactions were finally being done, while the bad news was stock held in inventories will be seriously devalued. The ones most affected were dealers, many of whom stocked up at prices around $1,200/st FOB. Some were concerned dealers with high-priced supplies may be hit so hard they could be forced into bankruptcy if they have to sell the product at a third of what they paid. Another said that was not the case, because many dealers have a captive audience of buyers, and farmers will have no choice but to buy at the higher numbers until the local dealer can re-supply at lower prices. However, he conceded that farmers in many areas were playing a waiting game with their dealers and had not started buying as of last week. Prices for corn were far below their peak, but still well above the price two years ago, which was around $2/bushel or less. Farmers did well last year and will do well again this year, so they do have the money to buy DAP and other fertilizers. The questions were, when will they and how much will they buy?
In addition, sources said distressed DAP, which was damaged at Agrifos by Hurricane Ike, sold between $335/st FOB and $385/st FOB. However, sales of distressed product are not included in the price range.
Based on actual sales last week, the NOLA DAP barge market was $375-$395/st FOB. Mosaic had no posted prices last week, and CF’s last price offering was $500/st FOB.
Eastern Cornbelt: The DAP market was reported at $535-$575/st FOB river warehouses in the region, with MAP roughly $25/st higher. One regional supplier was referencing forward contract DAP for January at $540/st FOB Peoria, Ill., and $545/st FOB Cincinnati. No current market information was available for 10-34-0.
Western Cornbelt: Sources quoted the DAP market at $525-$550/st FOB regional warehouses to the dealer. MAP was pegged at $545-$575/st FOB. Reference prices for forward contract tons from one regional supplier included DAP at $535/st FOB St. Louis, Mo., $540/st FOB Inola, and $545/st FOB Pine Bend for January shipments. Forward contract MAP for January was posted at $565/st FOB Inola and $570/st FOB Pine Bend. The 10-34-0 market was tagged at $880-$900/st FOB in the region.
California: Phosphoric acid pricing was down again from last report, reflecting another pricing adjustment from Simplot and Agrium. On Nov. 24, Simplot moved its super-phosphoric acid (SPA) and merchant grade acid (MGA) postings down to $11.50/unit rail-DEL. Simplot’s new FOB price for MGA in California is $11.70/unit. Those levels compare with previous reference prices at $17.50/unit DEL and $17.50/unit FOB in the state. On Nov. 21, Agrium’s MGA and SPA postings in the continental U.S. dropped to $1,150/st rail-DEL as well, down from Nov. 1 pricing levels at the $1.750/st rail-DEL mark.
DAP and MAP were pegged at $595-$600/st FOB or DEL in the state, down dramatically from last report. Agrium’s MAP postings dropped on Nov. 21 to $600/st FOB warehouse or rail-DEL in California and Arizona. Simplot reposted DAP and MAP on Nov. 24 at $595-$600/st FOB and $595/st railDEL in the California market.
16-20-0 was quoted at $380-$387/st FOB and $380/st rail-DEL in California, down some $300/st from last report. 10-34-0 remained at $732-$742/st FOB in California for the time being.
Pacific Northwest: SPA and MGA pricing had dropped to $11.50/unit DEL from the previous $17.50/unit level.
The DAP and MAP markets were quoted at $585-$595/st FOB or DEL in the region, with the low quoted for delivered tons in Montana. Those numbers were down significantly from last report. Agrium’s MAP postings dropped on Nov. 21 to $585/st DEL in Montana and Wyoming; $590/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; and $590/st FOB and $595/st DEL in Washington, northern Idaho, and Oregon excluding Malheur County.
16-20-0 pricing had reportedly fallen some $300/st from last report, with the dealer market pegged at $380/st rail-DEL and $385/st FOB regional warehouses. 10-34-0 pricing in the region was quoted at $535-$545/st FOB, reflecting a drop of more than $200/st from the previous level.
Western Canada: MAP pricing as of Nov. 27 was quoted at $790-$825/mt DEL in Western Canada, down more than $500/mt from last report.
U.S.Export: No new export sales were made by PhosChem or other sellers of North American phosphates, but a small deal between China and India was believed to have been concluded last week. That sale was for 15,000 mt of 11/44 MAP at $385/mt DEL, which would equal about $450/mt DEL for DAP. After subtracting $25/mt for freight, some sources argued this would have yielded about $425/mt FOB. Generally, sources called Tampa export DAP $450-$500/mt FOB.
Morocco was believed to be in the process of renegotiating its phosphate rock price down from the current price of $400-$500/mt FOB. The existing price would likely force its customers to shut down.
The biggest problem for the export industry has been a lack of credit by buyers. Deals that would have been done were rejected because banks did not accept letters of credit from customers. International credit will have to ease before export sales resume.
India: Contract negotiations were reported to be underway for phos acid and phos rock. Both should see a major drop, with buyers eyeing at least a new low of $750/mt DEL for phos acid.
POTASH
Eastern Cornbelt: Potash was quoted at $775-$850/st FOB regional warehouses, depending on grade and location.
Western Cornbelt: Potash was reported in the $750-$830/st FOB range in the region last week.
California: Muriate of potash was steady at $849-$900/st FOB and $875-$900/st DEL in the region.
Sulfate of potash remained at $1,105-$1,195/st FOB, depending on grade and supplier.
Potassium nitrate was steady 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 $840-$900/st DEL in the region, with minimal new business to test the market.
Western Canada: No current prices were reported for potash in the region last week.
Germany: K+S said that due to lower orders from the agricultural sector, particularly in Europe, its potash fertilizer production will be reduced by 400,000 mt in the fourth quarter at German production sites. The production of specialty and industrial products will be maintained. K+S said the European trade sector built up its stocks in recent months against the backdrop of rising fertilizer prices. It also noted that the ag sector is seasonally off in the fourth quarter anyway.
SULFUR
Tampa: As the phosphate industry continued and increased its rate of curtailment, sulfur not only had no place to go, but was quickly running out of storage space. Martin’s priller operation at Beaumont was running at full speed, and Galveston can block only 1 million tons. The priller, which will be doubled in February, loaded one vessel with 50,000 mt and was working on another for the same amount. Considering the world glut, it was doubtful the loaded vessels will actually go anywhere soon, and will probably be used for storage.
When oil companies sit down and negotiate with phosphate producers next quarter, prices will not only have to drop from the current $150/lt to Tampa, but may require negative pricing. Even then, phosphate companies will have limited use for sulfur until their own production returns to something near normal.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 24.30 | 28.16 | 61.92 |
| CF Industries | CF | 44.60 | 48.70 | 92.93 |
| Intrepid Potash | IPI | 14.89 | 17.90 | N/A |
| Mosaic | MOS | 26.29 | 27.85 | 71.06 |
| PotashCorp | POT | 49.60 | 59.22 | 122.45 |
| Terra Industries | TRA | 12.39 | 14.30 | 38.65 |
| Terra Nitrogen | TNH | 87.19 | 94.28 | 104.06 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 11.92 | 15.88 | 40.82 |
| Deere & Co. | DE | 30.98 | 33.10 | 87.69 |
| Scotts | SMG | 29.17 | 29.47 | 35.79 |
SPOT BARGE PRICES
CHS reports record FY ’08 earnings; ag business earns $568.3 M for year
CHS Inc. reported record net income of $803 million for the fiscal year ending Aug. 31, 2008, the fifth consecutive year of record income and revenues. Fiscal ’08 topped the prior year’s $756.7 million. Fiscal ’08 revenues were $32.2 billion, up 87 percent from the year-ago $17.2 billion.
The CHS ag business put in a stellar performance in FY ’08, with earnings of $568.3 million versus the year-ago $118.3 million. Ag business revenues soared to $19.7 billion, up from the year-ago $8.6 billion. The ag business includes crop nutrients, grain marketing, and retail operations, and CHS said all of them had strong global and domestic demand, along with record value for the products they market. For the year, CHS reported wholesale crop nutrient sales of $2.9 billion, with less than 10 percent of those made to co-owned Agriliance LLC or to CHS country operations business. CHS pre-tax crop nutrient income for 2008 was $137.5 million.
Crop nutrient inventories were put at $400 million as of Aug. 31, 2008. None were listed for the year-ago period, as the crop nutrient business was still with Agriliance LLC at that time.
Ag helped take up the slack from the CHS energy business, which saw a drop in earnings to $299.7 million from the year-ago $613.3 million. CHS attributed this to tighter margins.
CHS fourth-quarter net income was off, at $145.4 million on sales of $9.4 billion from the year-ago $297.1 million and $5 billion, respectively. However, ag earnings were up, at $63.8 million from $10.3 million. CHS noted that as the year ended, it recorded a $71.7 million ($55.3 million net of taxes) impairment on the value of its investment in VeraSun Energy Corp., an ethanol producer that recently filed for Chapter 11 bankruptcy. CHS owns 8 percent of VeraSun. VeraSun announced Nov. 24 that it has received a non-binding indication of interest for purchase for substantially all of its assets. For now, VeraSun will pursue this inquiry and is keeping the company’s identity and the terms confidential.
In 2008, based on 2007 results, CHS paid out $340 million in cash patronage, equity redemptions, preferred stock and dividends. Based on 2008 earnings, it expects to return about $340 million to owners during fiscal 2009.
Shermen to merge with ED&F Man/Westway Group
Shermen WSC Acquisition Corp., New York City, an investment firm led by fertilizer veterans Francis P. Jenkins Jr. and G. Kenneth Moshenek, said Nov. 25 that it has entered into an agreement with ED&F Man Holdings Ltd. to merge with ED&F Man’s bulk liquid storage and liquid animal feed supplement businesses (Westway Group). As part of the transaction, ED&F Man will transfer the businesses to Shermen in exchange for $103.0 million in cash and a combination of newly issued common and convertible preferred shares of Shermen valued at approximately $165.1 million.
ED&F Man is a leading global supplier of a broad range of commodity products, including sugar, molasses, animal feed, tropical oils, biofuels, and coffee to multinational and industrial consumers. Immediately following completion of the transaction, Shermen will be renamed Westway Group Inc. and will be headquartered in New Orleans.
Jenkins, current chairman and CEO of Shermen, will become chairman of the board of Westway. Moshenek, current president and a director of Shermen, will become a director of the company.
“Infrastructure and nutrients are two of the few constants in the agricultural industry today and both serve as key foundations for the expansion in the global growth of agriculture,” said Jenkins. “We believe the upcoming expansion in identity preservation, food safety concerns and increased global trade of agricultural commodities will accelerate the need for more storage. Westway’s bulk liquid storage facilities are strategically positioned in key markets to take advantage of the growth opportunities coming down the road. Westway’s liquid animal feed supplement business has been the premier source of liquid animal nutrients for the livestock industry for many years. With Westway’s leadership in the feed industry and the logistical advantages provided by its broad network of facilities, we expect solid growth in this business as it mirrors the global consumer’s growing appetite for higher protein diets.”
Peter Harding, currently an ED&F managing director with management responsibility for Westway, will lead the Westway Group’s management team. The bulk liquid storage business will continue to be managed by Wayne Driggers, a 17-year veteran of ED&F. The liquid animal supplements business will continue to be managed by Bryan Shoemaker, a 19-year veteran of ED&F.
“This transaction will provide Westway with the financing and independence necessary to develop the growth and expansion opportunities of our businesses,” said Harding, who will be Westway CEO. “In addition, we are excited to work with Francis Jenkins and the Shermen Group to identify and execute new opportunities for our company.”
ED&F Man’s bulk liquid storage business, currently operating under the name Westway Terminals, is a leading global provider of storage services to manufacturers and consumers of agricultural and industrial liquids. The business’s infrastructure includes a network of 24 terminal facilities, offering total storage capacity of 284.0 million gallons, located at key port and terminal locations throughout the U.S., Western Europe, and Asia. Westway has fertilizer storage at various sites, both domestically and internationally.
ED&F Man’s liquid animal feed supplement business, currently operating under the name Westway Feed Products, is the largest liquid animal feed supplement manufacturer in North America. The business produces approximately 1.7 million tons of liquid animal feed supplements annually, which are sold directly to ranchers or feed manufacturers supplying the beef, dairy, horse, sheep, and other livestock industries.
Westway’s 30 strategically located manufacturing and distribution facilities allow the business to supply liquid animal feed supplements to the 48 contiguous U.S. states, five Canadian provinces, and parts of Northern Mexico. Westway is the only North American liquid animal feed supplement manufacturer with such extensive supply capabilities. The business also supplies liquid animal feed supplements in Australia via its 50 percent interest in the Champion Liquid Feed Co., a joint-venture with Ridley Agri-Products formed in 2001.
The transaction, which is subject to approval by Shermen stockholders, regulatory approval, and other conditions, is expected to close in the second quarter of 2009. As part of the transaction, Shermen will apply to change its listing to the New York Stock Exchange or NASDAQ.