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Ethanol rail tanker fire in Ohio destroys farm equipment, spares anhydrous tank

Blanchard Valley Co-op lost farm equipment and had the outside of two buildings scorched, but was described as very lucky to escape without any further serious losses from an intense fire that erupted nearby when 31 ethanol cars derailed just west of Arcadia, Ohio, early Feb. 6 on a Norfolk Southern freight train. Luckily, a 30,000 gallon anhydrous ammonia tank on the Blanchard Valley property 100 to 200 yards away from the scene was untouched. “Initially we had some concerns for the tank while the fire was burning out of control,” Operations Manager Jim Boger told Green Markets. “But we didn’t even have to keep it wet down.”

The explosions and burning ethanol lit up the sky for miles, causing evacuation of nearby families but no injuries. A Norfolk Southern spokesman said there were no fertilizer cars on the Chicago-to-North Carolina train. He said the tracks were reopened late Monday night and trains were moving through the area at 10 miles per hour because of wreckage remaining on either side of the tracks. By Tuesday all fires had been put out. Both U.S. EPA and Ohio EPA were on the scene to make sure no contamination had reached area waterways.

Boger, who has been meeting with insurance adjusters and safety advisers, said losses were in an out-of-season storage area where trucks, trailers, nurse wagons, applicators, and other farm equipment are parked. So far, the losses include 13 ammonia application tanks, 11 twenty-eight-percent applicators, 37 liquid fertilizer nurse wagons, and other equipment sitting in the yard. “No dollar figure has been set on the loss and only time will tell just how much it is,” Boger reported. “We also lost one nurse truck and there was external damage to a chemical and seed warehouse and an equipment warehouse.”

Agronomy Manager Mike Tobe described the scene this way: “It was a cloud of fire and no doubt very intense. The train derailed just east of our facilities and the cars piled up, and as they piled up they began to explode and catch fire and exploded onto our property. It burned up equipment that’s outside and did some exterior damage to some of the buildings.” Tobe added that railroad people have been on the scene to help with the cleanup.

Garry Valentine, director of the Hancock County emergency management system, said Blanchard was “very, very lucky” not to have experienced some severe losses. “They had two buildings scorched, along with several empty ammonia nurse tanks that were destroyed by the fire,” Valentine reported. He said he was pleased with the railroad’s response and cleanup programs, and indicated the Federal Railroad Administration will report on the cause of the derailment in a few months.

Norfolk Southern spokesman Rudy Husband promised the railroad “will be working with Blanchard and make sure they’re made whole.” He said a claims department had been set up to handle the situation.

4Q SOP volumes soar for Compass

Sulfate of potash (SOP) volumes at Compass Minerals soared during the fourth quarter ending Dec. 31, 2010, to 107,000 st compared to the year-ago 41,000 st. The company said the greatest growth came from North American customers.

The increased demand helped the average SOP selling price move to $530/st for the quarter, up from the third quarter’s $506/st average. In addition, the company launched three price increases in November and December totaling $80/st. By comparison, the average selling price for fourth quarter 2009 was $640/st.

Operating income from the company’s specialty fertilizer segment was up $5 million to $17.9 million on sales of $56.6 million for the quarter, versus the year-ago $12.6 million on sales of $26.3 million. The increased sales volumes were partially offset by lower prices and delays in new equipment installation associated with the Phase I expansion of the company’s SOP plant.

Full-year SOP volumes more than doubled at 362,000 st from the year-ago 153,000 st. Average prices were off over $300/st, to $518/st from $828/st.

Full-year SOP operating earnings were down to $61.4 million on sales of $187.5 million from the year-ago $76 million on sales of $126.8 million.

Despite the improving SOP market, overall Compass results for the fourth quarter were pulled down by its salt sector, which has suffered from production problems and higher per-unit costs as well as carryover inventories from the prior year. Compass-wide net income for the fourth quarter was $61.1 million ($1.83 per diluted share) on sales of $356.3 million, compared to the year-ago $62.5 million ($1.88 per diluted share) on sales of $312.2 million. Full-year net income was $150.6 million ($4.51 per share) on sales of $1.07 billion, versus the prior year’s $163.9 million ($4.92 per share) on sales of $963.1 million.

Going forward, Compass expects SOP pricing to improve and remain attractive in 2011, with demand close to pre-recession levels. It said the recent acquisition of Big Quill’s SOP assets will broaden and strengthen the business. Compass said operating margins will be pressured through the first quarter of 2011 as a result of the per-unit cost increases from carryover inventory caused by 2010 delays of Phase I at the Ogden, Utah, facility.

Compass expects improvement in its salt business as the year progresses as the company returns to more normal production levels. First-quarter salt prices are expected to be even with those of a year ago. Despite the number of snowfall events this year, Compass noted that it does not have a significant presence in East Coast salt markets, where the winter weather has been particularly severe.

Agrium, Monsanto electric rates go up

Effective Jan. 1, Agrium Inc.’s phosphate fertilizer complex and Monsanto’s elemental phosphorus plant, both in Southeast Idaho’s Caribou County, saw their Rocky Mountain Power electrical rates go up by 9.4 percent and 9.6 percent, respectively.

The rate hikes were approved by the Idaho Public Utilities Commission following a large turnout at two public workshops, a three-day technical hearing and five public hearings, and hundreds of written comments from customers who expressed concerns about rate increases in a variety of categories during an economic downturn.

Rocky Mountain Power serves 70,000 customers in Eastern Idaho. The utility had proposed raising Agrium’s power rate by 14.7 percent and Monsanto’s rate by 18.2 percent. Residential customers will pay a net increase of about 5.5 percent.

“Over the last eight years we have experienced nearly one million dollars in rate increases,” said Paul Poister, an Agrium spokesman. “This most recent increase will add about $570,000 to our rates. Increases from time to time are expected, but we believe this rate hike is excessive and oppose it.”

A final order in the case will not be issued until late February. Issues related to the contract between Rocky Mountain Power and Monsanto, its largest customer, were examined over two months, with a technical hearing scheduled for Feb. 1. The final order will determine what Monsanto should be paid for allowing Rocky Mountain to interrupt service during certain times of the year. Petitions for reconsideration or appeals can be made after the final order is issued in February.

“Electricity is a significant cost of business for Monsanto’s Soda Springs Plant, and we work diligently to keep production costs low for the benefit of our customers,” said Jim Smith, Monsanto power procurement manager. “Monsanto accepted this January rate increase only because it reflected a rising power market at the time. Similarly, we expect to get credit for this increase in general rate proposals coming later this year, and those proposals will reflect more recent market trends.”

Rocky Mountain recently asked for the largest rate hike in its history in Utah a $232.4 million increase of 13.7 percent. The utility warns that Utah customers may see annual price increases of 8-10 percent annually for the next decade due to increasing demand and use.

Israeli government, ICL in arbitration over potash royalties

Two lawyers have been selected by Israel’s Finance Ministry and Israel Chemicals Ltd. to oversee an arbitration case regarding the level of royalties to be paid by the company for extracting potash from the Dead Sea. The next stage will be for the two lawyers to agree on an arbitrator of the dispute.

The two sides tried to resolve the dispute in the past through the appointment of a mediator. However, the mediation process was cancelled after the two sides failed to agree on a mediator. After this, both sides agreed to arbitration, with the arbitrator’s decision being final.

According to the 1995 agreement under which Israel Chemicals was privatized, the rate of royalties was fixed at 5 percent of its revenues from the sale of potash. The agreement specified that the royalty issue was subject to reevaluation in 2010 regarding potash production above the 3 million mt a year level, with a maximum rate of no more than 10 percent.

The Finance Ministry is demanding that a 10 percent royalty rate be implemented, to which ICL is opposed.

In a related development, the Ministry has ordered a second independent assessment on whether ICL paid the government the full royalties due for the years 2003-2005. The previous report found that due to a change in accounting methods, the government was owed $115 million. ICL rejected the findings, arguing that the matter was subject to the legal interpretation of its licenses.

In October 2010, Israel’s National Infrastructure Ministry raised the royalties it levies on phosphate mining to $0.443 per mt, an 84.5 percent increase. ICL produced 2.7 million mt of phosphate rock in 2009, most of which was used in the production of phosphate fertilizers and phosphoric acid. This compared to the rate of $0.24 per mt that was instituted five years ago.

USDA reports tightest corn stocks since 1995/96

Washington-USDA’s World Agricultural Supply and Demand Estimates (WASDE), released Feb. 9, lowered U.S. corn ending stocks for 2010/11 by 70 million bushels due to higher expected food, seed, and industrial use. As a result, the stocks-to-use ratio fell to 5 percent, the same as in 1995/96, the last time ending stocks fell to multi-year lows. The 2010/11 marketing year average farm price for corn is projected at $5.05 to $5.75 per bushel, up from $4.90 to $5.70 per bushel last month. WASDE projected corn used for ethanol at 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January. Corn food, seed, and industrial use is also projected higher for 2010/11 due to rising prospects for production of sweeteners and starch. The report left U.S. soybean supply and use projections for 2010/11 unchanged this month, leaving ending stocks at 140 million bushels. Although soybean export shipments are only modestly ahead of last year’s pace, record sales through the first five months of the marketing year are expected to result in stronger gains in the second half of the marketing year. Continued strong soybean meal export competition this spring, especially from Argentina, is expected to leave U.S. soybean crush well-below 2009/10 levels. Soybean oil exports are increased to 2.8 billion pounds reflecting continued strong export sales. The U.S. season-average soybean price range for 2010/11 is projected at $11.20 to $12.20 per bushel, unchanged from last month. WASDE said U.S. wheat supply, use, and ending stocks projections for 2010/11 are unchanged this month as well. Higher projected exports for hard red winter wheat were offset by lower domestic use, while the reverse was true for hard red spring wheat. The marketing-year average price received by wheat producers is projected at $5.60 to $5.80 per bushel, up 10 cents on the lower end of the range. No changes were made on the supply side of the U.S. 2010/11 rice supply and use balance sheet, and the all rice season average price is forecast at $12.15 to $12.65 per cwt. The 2010/11 U.S. cotton supply and demand estimates are unchanged from last month. The forecast for the average price received by producers of 79 to 84 cents per pound is raised 1 cent on the lower end and lowered 2 cents on the upper end of the range.

Ag input fire evacuates small N.C. town

Warrenton, N.C.-Nearly the entire town of Warrenton, population 960, was evacuated for nearly 24 hours because of dense smoke from a fierce fire that destroyed a Southern States Farm and Garden location earlier this month. “We evacuated a five-block area including both residential and businesses, and that order remained in effect until the next day due to the amount of smoke in the area,” according to Volunteer Fire Chief Walter Gardner, who is also town mayor. “At 6 p.m. Thursday Feb. 3 the hazmat team on the scene, as well as EPA, ruled the air quality had improved and we changed the order from a mandatory to a voluntary evacuation,” Gardiner said. Fire crews had shut off water operations, but maintained coverage on the county library located nearby. Approximately 25 families were displaced for the night, and 20 businesses, including three restaurants, a bank, and the county courthouses, were shut down. Although Warren County opened a shelter only a few people took advantage, since most others found family and friends to stay with. The Red Cross arranged for hotel housing for two couples. “That pretty much emptied the town, including my insurance office,” Gardiner noted. He said the Southern States business was completely destroyed, with the exception of the fuel and heating business that adjoined the warehouse area. Because of the burning fertilizer, pesticides, and other farm inputs, the carbon monoxide level from the smoke was so high it became a real health concern, he reported. The smoke continued until last Monday, Feb. 7, when the fire department was given permission to go back to wet down any areas still smoking. The voluntary evacuation order was lifted Monday evening, but downtown businesses did open on Friday, Feb. 4. Southern States owner Karl Hehl wasn’t available, but reports indicated origin of the fire was probably accidental.

Scotts invests $17M; plant grand opening Feb. 25

Pearl, Miss.-Scotts MiracleGro Co. is holding the grand opening of its new fertilizer plant here in Rankin County, near Jackson, Feb. 25, 2011. The plant began production in early January. The project represents a company investment of approximately $17 million and will create 95 new jobs once fully operational. From its new location, the company will produce its well-known consumer lawn and garden brands. Scotts’ operations are housed in the former Clorox facility. The facility is part of Scotts’ plans to locate its production nearer to where its products are consumed in order to maximize transportation efficiencies for both raw materials and finished products. It also allows a more rapid response to demand. It has another such facility in Fort Madison, Iowa. The Mississippi Development Authority worked closely with company and local officials to help facilitate the project and provided assistance through the Jobs Tax Credit program along with other tax incentives. Additionally, Rankin County provided the company with tax incentives to assist with the project. In other news, Scotts recently opened two new regional offices in Chicago, Ill., and in Port Washington, N.Y.

Rentech bullish on fertilizer

Los Angeles-Rentech Inc., which owns nitrogen producer Rentech Energy Midwest Corp. (REMC), reported revenue of $42.1 million for its first quarter ending Dec. 31, 2010, compared to the year-ago $27.1 million. “Our exceptionally strong fiscal first quarter results reflect the significant rebound in the fertilizer and agriculture markets,” said Hunt Ramsbottom, Rentech president and CEO. “We expect a continued positive environment for REMC’s products which supports a robust outlook for our business.” First-quarter operating income was $15 million, compared to a year-ago loss of $2 million. The improvement was due to higher gross margins resulting from greater sales prices and volumes. The prior year loss reflected a $4 million turnaround expense. Rentech continues to project REMC fiscal year operating income of at least $50 million and EBITDA of at least $60 million. REMC has signed contracts with fixed prices for the sale of more than 70 percent of its forecasted deliveries for the fiscal year and for the natural gas required to produce that product. Company-wide, Rentech was still in the loss column as it uses REMC cash flow to fund the development of its energy technology business. First-quarter losses were $5.9 million ($.03 per diluted share), versus the year-ago loss of $15.5 million ($.07 per share).

Bunge 4Q fertilizer results improve

White Plains, N.Y.-Bunge Ltd. reported significantly improved results from its fertilizer segment for the fourth quarter ending Dec. 31, 2010, with higher margins in its Brazilian business partially offsetting lower volumes. However, the company notes the business is still in a transition following the sale of its nutrient production assets last year to Vale S.A. It reported that its Argentine business performed well in the quarter, benefiting from higher volumes and margins. The fertilizer segment reported fourth-quarter EBIT of $1 million on sales of $731 million, compared to the year-ago loss of $174 million on sales of $974 million. Fertilizer volumes were 1.7 million mt, down from 3.33 million mt. The year-ago period includes Bunge’s nutrient production assets. Full-year fertilizer EBIT was $2.34 billion (reflecting the asset sale) on sales of $2.73 billion, up from the year-ago loss of $616 million on sales of $3.7 billion. Volumes were 7.71 million mt, down from 11.6 million mt. Going forward, Bunge said farm economics are good and it expects increased plantings and demand for fertilizer. Company-wide, Bunge reported fourth-quarter net income attributable to Bunge of $301 million ($1.95 per diluted share) on sales of $12.7 billion, up from the year-ago net income of $11 million (negative $.21 per share) on sales of $10.4 billion. Full-year net income was $2.35 billion ($15.06 per share) on sales of $45.7 billion, up from the year-ago $361 million ($2.22 per share) on sales of $41.9 billion. Bunge said that due to natural volatility of its industry, it would no longer provide specific annual earnings-per-share guidance.

Innophos 4Q sales increase 31 percent

Cranbury, N.J.-Specialty phosphate maker Innophos Holdings Inc. reported a 31 percent increase in sales during the fourth quarter ending Dec. 31, 2010, to $192.2 million from the year-ago $147.2 million. Net income surged to $19.3 million ($.86 per diluted share) from the year-ago $158,000 ($.01 per share). The company credited the results to a strong performance from its U.S. and Canadian specialty phosphates business and a recovery in the GTSP/Other segment compared to the weather-affected third quarter following hurricane disruption to transportation in Mexico. Innophos said specialty phosphate volume growth continued in the double digits despite tougher prior-year comparisons, and demand remains strong in all markets. It also reported sequential pricing improvement and said it is on track with its price increase and margin objectives. It expects phosphate rock and sulfur prices to remain strong, and noted that it has reached agreement with three rock suppliers on major terms for 2011 supply to the Coatzacoalcos facility, with options for other spot suppliers. It told analysts that there would be a turnaround at the Coatzacoalcos facility in the first quarter. Full-year net income was $45.1 million ($2.02 per share) on sales of $714.2 million, down from the prior year’s $63.1 million ($2.87 per share) on sales of $666.7 million.