Calgary-Agrium Inc. said Jan. 21 that the Commissioner of Competition appointed pursuant to the Competition Act (Canada) has issued a “no-action” letter in respect of Agrium’s previously announced agreement for the acquisition of all of the outstanding common stock of UAP Holding Corp. by a wholly-owned subsidiary of Agrium. The receipt of the “no-action” letter satisfies the Competition Act condition under the agreement. The tender offer is scheduled to expire at midnight, New York City time, on Monday, Feb. 25, 2008, unless the tender offer is extended. Agrium is still awaiting approval by U.S. regulatory authorities (GM Jan. 21, p. 1).
All posts by traceybg@gmail.com
ICL closes Biogema deal
Tel Aviv-ICL Performance Products, a unit of Israel Chemicals Ltd., said Jan. 21, that it has completed the acquisition of Biogema S.A., a French manufacturer of fire safety products. ICL previously announced its agreement to acquire Biogema in November 2007. ICL says the strategic acquisition of Biogema, following its recent acquisitions of Astaris LLC and Fire-Trol, firmly establishes ICL as a world leader in wildfire fighting products. Biogema will be integrated into ICL Performance Products’ Fire Safety business unit, which includes Astaris’ fire safety business, acquired by ICL in 2005, and Fire-Trol, a Canadian producer of wildfire retardants, acquired in 2007. Biogema, which produces and sells wildfire retardants and fire foams for extinguishing fires, adds a broadened product portfolio and geographic reach to ICL’s fire safety business, as well as important European manufacturing, logistics, and support capabilities.
Viterra reports improved results
Regina-Viterra’s Agri-Product gross profits were up, at C$219.2 million on sales of $934.6 million for the year-ending Oct. 31, 2007, versus the prior year’s $76.7 million and $533.3 million. The segment includes an ownership of 276 retail locations, a fertilizer distributor, and a stake in a manufacturer – Western Cooperative Fertilizers Ltd. Sales lines include fertilizer, crop protection products, seed and seed treatments, and equipment. EBITDA for the sector was up almost $100 million, to $124.0 million from the year-ago $28.9 million. Viterra says high commodity prices bode well for its fertilizer business in 2008, and reports increased pre-buying by farmers. Viterra-wide gross profit was $586.4 million on sales of $3.57 billion, versus the year-ago $263.9 million and $1.64 billion. EBITDA was $258.0 million, up from $80.4 million. Viterra is the merged Saskatchewan Wheat Pool Inc. and Agricore United.
AGRIS Co-op reports record results
Chatham, Ont.-AGRIS Co-operative recorded combined sales of more than C$119 million for fiscal 2007, which ended Aug. 31, 2007. As a result, the board of directors declared a patronage rebate of $325,000, which will be issued in a combination of shares and cash redemptions to the members of AGRIS Co-operative. Patronage will be calculated based on members’ purchases and grain sold. All fuel, grain, and crop input business will be patronage eligible. In fiscal 2006, AGRIS had sales of C$106 million with no patronage. AGRIS is a 100 percent farmer-owned grain marketing and farm input supply company, serving more than 1,200 farmer members in 14 locations in Essex, Kent, Elgin, Middlesex, and Lambton Counties. It is a leader in precision farming technology, seed, agronomy, and petroleum services. AGRIS is a member-owner of GROWMARK Inc. and markets products and services under the FS banner.
High ticket equipment sales up in 2007
Milwaukee-High ticket equipment sales to the agriculture market were up significantly in 2007, according to the Association of Equipment Manufacturers. Four-wheel drive tractor sales were up 22.7 percent for the year, to 3,664 units from the year-ago 2,986. Even more buying was done in December, which saw a 34.2 percent increase, to 365 from 272. Self-propelled combine sales were up 15.4 percent for the year at 7,116, up from the year-ago 6,168. December sales were up 14.5 percent, to 916 from the year-ago 800. Total tractor sales were up only slightly, by just .5 percent, to 218,607 in 2007, versus the year-ago 217,511. They were actually off .4 percent in December, to 16,444 from 16,507.
Anglo eyes shareholder rights plan, name change
Calgary-Anglo Minerals ltd. said Jan. 23 that its board of directors has adopted a shareholder rights plan designed to encourage the fair treatment of shareholders in connection with any takeover offer for the corporation. The plan will provide the board of directors and shareholders more time to fully consider any unsolicited bid. Anglo said it is not aware of any pending or threatened bids at this time. Anglo also announced that it has proposed to change the name to Anglo Potash Ltd. in order to better reflect the company’s focus on its ongoing business. The name and the symbol AGP have been reserved with the TSX Venture Exchange. The shareholder rights plan and name change will be considered at a shareholder meeting Feb. 15. Anglo and its joint venture partner, BHP Billiton Diamonds Inc., hold potash permits covering 1.6 million acres in central Saskatchewan.
Fast-growing trees may be ethanol source
Huntsville, Ala.-Fast-growing trees and grass that don’t need as much fertilizer can be an economically viable alternative to corn for producing ethanol within five to seven years, predicts a University of Alabama Huntsville researcher. And, according to Dr. Gopi Podila, a UAH biologist who has been conducting research on high-yield trees for more than a decade, there will be a double benefit, because it will reduce the amount of nutrients flowing into the Gulf of Mexico “dead zone.” “Ethanol from cellulose, whether from trees or other sources, will be the way to go in the very near future,” insists Podila. “Trees are cheaper to raise than corn, have a competitive yield and they don’t need as much of the fertilizers that are causing all of the problems in the Gulf.” Podilla believes these trees also offer the U.S. a realistic option for producing enough renewable energy to make a meaningful dent in fossil fuel imports. Podila concedes that technical challenges remain, including a cost-effective way to convert wood pulp into sugars. But he believes growing high-yield trees like poplar and aspen planted once every 30 to 40 years could be harvested every five or six years because they grow back from the roots. Many of these trees and grasses like switchgrass will grow on land that might have marginal value for farming, he noted.
Management Briefs
CVR Energy Inc. announced Jan. 17 that Steve Eames has joined the company as vice president, corporate communications. He has responsibility for the company’s public relations, corporate communications, and employee and marketing communications programs. “Steve brings to CVR Energy decades of experience as a credible public company spokesperson and represents a significant addition to our strong management team,” said Jack Lipinski, chief executive officer. “Because he has served CVR Energy in a consulting capacity for the past several years, Steve already knows our company and understands our vision.” During the past 25 years, Eames has led communications programs at several businesses, including IBM, The Coastal Corp., and USAA. For the past seven years Eames headed his own public relations consultancy.
Viterra named Rex McLennan as chief financial officer, effective Feb. 4. Prior to joining Viterra, McLennan held increasingly responsible positions in the mining and oil and gas sectors. From 1997 to 2005, he was the executive vice president and CFO for Placer Dome Inc., a multinational mining company acquired by Barrick Gold in 2005. Prior to this, he held the position of vice president and treasurer with the same company. For more than ten years, he held positions of increasing responsibility in business planning, finance, and treasury, and was a senior advisor in the treasurer’s department for Imperial Oil, a publicly traded Canadian subsidiary of Exxon Corp. Most recently, he was the executive vice president and CFO for Vancouver 2010 “VANOC,” the organizing committee for the 2010 Olympic and Paralympic Winter Games.
McLennan replaces David Carefoot, who will remain with the company until the end of February to assist with transitioning.
Market Watch
AMMONIA
U.S. Gulf/Tampa: While no changes in prices were heard for imports, sellers say market psychology is in their favor. They cite recent outages in Trinidad, including Yara’s strike shutdown (see related story, page 14) as well as PotashCorp taking down its number three plant due to mechanical problems.
The PotashCorp outage occurred late the week of Jan. 14, and the company plans to keep the plant down for five weeks in order to both fix the problem and conduct other maintenance. The five-week outage is expected to take some 33,000 mt of ammonia out of the market. Add the Yara outage as well and you are coming close to 70,000 mt. Sellers can also point to higher prices being posted at Yuzhnyy. Add all this together and they are adamant that higher numbers will be recorded for the next business at Tampa.
In the meantime, there was a report late in the week of a new NOLA barge sale in the $535-$538/st range.
There was also a report late in the week of a new vessel sold into Tampa at $540/mt DEL for early February.
Eastern Cornbelt: Sources quoted the anhydrous ammonia market steady at $660-$670/st FOB terminals for spot tons, with several saying most suppliers were no longer accepting spring prepay orders.
Western Cornbelt: The anhydrous ammonia market was pegged in the $620-$660/st FOB range, with the low in Nebraska and the high in Iowa. A Missouri source quoted delivered ammonia at $630-$640/st from production points in Oklahoma and Kansas, with dealer reference levels reported at the $665/st level FOB Palmyra, Mo.
California: The anhydrous ammonia market was quoted at $585-$600/st DEL in the state, up significantly from last report, and sources said additional increases are likely before the spring season opens. Agrium raised its anhydrous ammonia postings on Jan. 11 to $585/st truck-DEL in central California and $590/st truck-DEL in northern California. Those levels reflect an $85/st increase from the company’s Dec. 21 postings. Calamco’s ammonia prices also moved up on Jan. 11 to $585-$590/st truck-DEL and $600/st rail-DEL in California.
Pacific Northwest: Anhydrous ammonia was quoted in a broad range at $695-$725/st DEL, depending on location. One supplier was reportedly referenced at the $695/st FOB level in the region as well.
Western Canada: Anhydrous ammonia pricing remained at $853-$889/mt DEL in the region.
Middle East: Mitsui and PIC sealed a deal for 15,000 mt at $500/mt FOB. The cargo is slated for shipment in the first half of February. Sources say Mitsui was forced to accept the record price because no one else had any product available.
The other producers have been arguing they are sold out. Some buyers were skeptical about the claim, because in the past producers were always able to come up with an extra cargo or two once some extra money was put on the table. This time, however, no incremental bid increases were able to shake loose a cargo.
Only after the buyer was ready to pay $50/mt more than the most recent deal did material appear. For buyers from this region, this deal confirmed the tightness of the market.
Sources say the shortage in the area was building in intensity. Indian buyers had come into the market much quieter than in previous years. Instead of public spot business or open tenders, the buyers looked to contracts and long-term formula deals.
While the purchasing went on behind closed doors, the available tons for public purchases dwindled rapidly.
The industry had expected to see Iranian material flowing out of the area by the beginning of this year. Delays in production plagued the new facilities.
Sources now say the market will be lucky if any new ammonia flows out of Iran by the beginning of the next quarter.
Adding to the shortage of anticipated material, Sabic went down for routine maintenance. Operations are expected to resume by the end of February.
A realistic price range for spot tons, said one Asian trader, is to take the last done business as the low and the current business as the high. He noted that the low end price of the material being shipped is not changing. The upper end and tons tied to formulas is what is moving and showing the real trends in the marketplace.
For now, the market is pegged at $450-$500/mt FOB.
Black Sea: With word that $500/mt FOB was achieved in the Middle East, Yuzhnyy sellers immediately adjusted their pricing ideas to match. Sources report that buyers are now being told the entry fee for discussions is a bid of $500/mt FOB. Observers in Asia and Europe say this price has not been met, but it should only be a matter of time.
Strong demand across the globe is keeping upward pressure on ammonia from all sources. The Yuzhnyy strength is predominately coming from European and American buyers.
European sources say some push back is beginning to occur, but few doubt the protests will amount to anything in the near term. Because buyers are still able to pass on most of the increased cost of the ammonia to their customers, there are fewer complaints than might have occurred if downstream prices could not sustain the new ammonia levels.
Nailing down exactly where the market is at this point is difficult. It is clear $450/mt FOB was done. And now producers are arguing for $500/mt FOB.
With no business confirmed at the $500/mt FOB level but with strong reports of business concluded at $450/mt FOB, sources say the market could be placed between these two prices. To be safe, however, one observer suggested using the $450/mt FOB price as the top end of the range until the full impact of the Middle East pricing takes effect.
Asia: The market remains tight, and options for buying remain limited.
Exports from Malaysia and Indonesia are limited, if not non-existent.
Sources report one deal by PhilPhos from Kaltim/Indonesia at $530/mt CFR for an estimated netback of $490/mt FOB.
India: Industry observers are waiting for the other shoe to drop. Last month FACT issued a tender for only one cargo of 7,500 mt instead of the usual cargoes. The thinking at the time, say sources, was that by the time FACT would need the second cargo, prices will have come off.
Now, say observers, it appears as if FACT lost the bet. Prices continue to climb. The company will soon have to pay much more for its ammonia than if it had kept to its traditional methods.
No one is blaming the FACT planners. Many in the industry said they would have done the same thing.
Sources now expect to see FACT back in the market for April tons some time this week or next.
UREA
U.S.Gulf: Cold, wet weather combined with a few anxious sellers last week to reportedly take prices down at NOLA. Some sellers were none too happy with the news, saying there was simply no need for it; that there was no need for any new business until after the TFI Orlando meeting in early February. Regardless, most were putting the granular market within the $415-$420/st FOB range. Prills were reported to have traded as low as the low $380s/st FOB.
Some sources said there was simply too much product at NOLA due to imports and a lack of buying, so anyone wanting to make a sale was going to have to lower their price.
Eastern Cornbelt: Granular urea was pegged at $465-$475/st FOB in the region. Jan. 18 postings from Agrium ranged from $470-$485/st FOB regional terminals, with the low in Illinois and the upper end FOB E. Liverpool, Ohio.
Western Cornbelt: Granular urea remained at $460-$470/st FOB in the region, with the upper end reported in Missouri. One Iowa source pegged the market at $465/st FOB for prompt tons and $470/st FOB for February. Agrium’s Jan. 18 urea postings included $470/st FOB St. Louis, Mo., and $485/st FOB Hoag, Neb.
California: Urea pricing had reportedly “stabilized,” with the California markets quoted at $490-$510/st FOB and $510-$515/st DEL.
Pacific Northwest: Granular urea pricing was steady at $495-$520/st FOB and $520-$540/st DEL in the region, depending on location. The Montana urea market was pegged at $510-$520/st DEL.
Western Canada: Granular urea was unchanged at $575-$600/mt DEL.
Black Sea: Unlike the ammonia market, the urea market from Yuzhnyy is showing severe signs of weakening. Asian sources say pricing ideas have dropped to near $350/mt FOB, but could not point to specific business at that level.
Producers are up in arms about continued reports of prices going below $370/mt FOB. Yet sources continue to insist that prices have slid into the $350s/mt FOB.
The problem is that buyers and producers are hard pressed to point to any actual business to back up their claims.
One Asian trader figured the market is so quiet right now that nailing down a price with actual business is normal. He added that if anyone secured a full vessel order in the low $350s/mt FOB, word would rapidly spread. Likewise, if the producers’ claims of prices remaining in the $370s/mt FOB were true, they would be parading the deal before every publication and possibly even take out radio and television advertisements to bolster their claim.
For now, sources in Asia are content to call the market $350-$360/mt FOB until something tangible comes along.
Middle East: While the Yuzhnyy producers are still looking for buyers, sources say the Middle East suppliers are quite comfortable.
Vessels of material for the U.S. and India continue to load cargoes. Sources say the order books in the area look fine well into February.
Prices have not changed.
An Asian trader noted that the deal between Fertil and IPL at $389/mt FOB now appears to have been a one-off arrangement. Efforts by others to replicate that level came to naught.
Sources now say the market is back to the $400-$410/mt FOB level.
China: The central government announced it was capping the price farmers can be charged for urea and other fertilizers.
One source noted that the Beijing price controllers were stunned by the steady and dramatic rise in prices coming out of the fourth quarter of last year. The planners had expected the market to return to its traditional first quarter doldrums. The addition of a 30 percent export duty would be enough, they thought, to keep more urea at home than offshore.
The strong demand from India and other buyers, however, kept the price in record territory well into January. The government altered its duty levels and schedule to more emphatically express its desire that urea should not be exported. Sources in the global industry, however, noted that all the increased duties for the second and third quarter did was move the global market up.
In the past the strong domestic market coming into the second quarter was enough to discourage producers from sending their material offshore. Now, however, producers appear to be looking more closely at the international market for better returns.
One observer noted that by capping what farmers can be charged, the government is actually helping push the urea producers to ship more material overseas where no such cap exists.
Even with a good harvest last season and strong crop prices, sources say farmers remain angry that urea prices have also increased. With so many farmers in the country, the government is not anxious to give them any excuse to complain publicly.
Sinochem won a tender sponsored by TFC/Taiwan. Sources say the material will cost TFC $385/mt CFR for an estimated netback in the low $350s/mt FOB bagged.
Sources say bids of $355/mt FOB bagged are being entertained, but the bulk of the business being recorded is in the low $360s/mt FOB.
The capped price to farmers is put at RMB1,725, or about $215/mt ex-factory.
India: Industry observers continue to say MMTC or IPL will be back in the market with a large tender some time late February. Some of the more bullish players say early March.
Bangladesh: Government agencies continue to say the country needs 50-75,000 mt of urea soon. Yet, say sources, there appears to be no movement by BCIC to call a tender to secure the tons.
Even if a tender is called, said one trader, there are few mainstream urea traders willing to participate in any further BCIC tenders.
During the past 18 months BCIC called a number of tenders and rarely followed through with issuing an award until way past the validity dates of the offers.
One by one the trading houses backed away from the tenders, until few trading houses with extensive urea trading experience remained willing to talk to BCIC.
Some of the delays are put off to the fact that Bangladesh has been operating under a caretaker government. With ever-rising prices, sources said the caretakers did not want to be blamed for spending more money than in previous years for the same quantities of material.
Others in the industry were less kind. They groused regularly about the bureaucratic nightmares they had to endure to participate in the tenders and subsequent discussions. The delays in moving the paper efficiently, one trader said, meant validity dates passed and bonds were forfeited.
NITROGEN SOLUTIONS
Eastern Cornbelt: UAN-32 remained at $365-$380/st ($11.41-$11.88/unit) FOB regional terminals. Posted prices to the dealer included $11.45/unit FOB Mt. Vernon, Ind., and Cincinnati/Finney; $11.55/unit FOB Marseilles and Meredosia, Ill.; $11.65/unit FOB Newton, Ill.; and $11.75/unit FOB Danville, Ill.
Western Cornbelt: UAN-32 was generally quoted at $360-$372/st ($11.25-$11.63/unit) FOB regional terminals.
California: UAN-32 pricing in California was described as stable at $390-$410/st ($12.19-$12.81/unit) FOB and $410-$425/st ($12.81-$13.28/unit) DEL.
Pacific Northwest: UAN-32 remained at $410-$425/st ($12.81-$13.28/unit) DEL in the Pacific Northwest region.
Western Canada: UAN-28 was quoted at $362-$378/mt ($12.93-$13.50/unit) DEL in the region, unchanged from
last report.
AMMONIUM NITRATE
Western Cornbelt: Ammonium nitrate was reported at $390-$400/st FOB, up slightly from last report, with the upper end of the range reflecting new dealer postings in Missouri.
California: No market was reported for ammonium nitrate in the state. The CAN-17 market was quoted at $310-$320/st FOB. One supplier had moved its field grade calcium nitrate postings up $20/st to $320/st FOB, solution grade calcium nitrate up $30/st to $470/st FOB in 50-pound bags, and CAN-27 up $20/st to $370/st FOB.
Pacific Northwest: Ammonium nitrate had reportedly firmed to $460/st rail-DEL in the region. CAN-17 was reported at $290-$304/st FOB, reflecting another increase from last report.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate pricing was up slightly from last report at $280-$290/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was pegged at $280-$290/st FOB, also up from last report. The upper end of the range was reported in Iowa, with the low in Missouri.
Southern Plains: American Plant Food Corp. announced some increases to its ammonium sulfate postings in Texas. Effective Feb. 4, granular ammonium sulfate will firm $20/st to $240/st FOB Freeport, $250/st FOB Galena Park, $260/st FOB Fort Worth, and $270/st FOB Littlefield. The company’s coarse grade sulfate postings will move on that date to $225/st FOB Freeport, $235/st FOB Galena Park, $245/st FOB Fort Worth, and $255/st FOB Littlefield, while standard grade ammonium sulfate will firm to $215/st FOB Freeport and $245/st FOB Littlefield, and N-Pac Compacted postings will move to $255/st FOB Galena Park.
California: Ammonium sulfate was up from last report at $285-$300/st FOB, depending on location and grade, with the low end reported for standard grade sulfate. Some sources talked of rail-delivered sulfate coming in to the region for as low as $265/st, but sales at that level were not confirmed.
Pacific Northwest: Ammonium sulfate was reported at $292-$302/st DEL in the region, with the FOB range at $287-$297/st. On Jan. 17, Simplot reposted ammonium sulfate at $302/st DEL in Montana, Wyoming, Idaho, Washington, and Oregon, and $297/st FOB in Idaho, Washington, and Oregon. Agrium’s Jan. 1 ammonium sulfate postings included $287/st FOB and $292/st DEL in the region.
Western Canada: Ammonium sulfate pricing in the region remained firm at $375-$380/mt DEL.
PHOSPHATES
Central Florida: After a burst of activity the previous week, Central Florida’s phosphate market slowed a bit last week – at least in terms of prompt sales. One trader noted that dealers appear to have filled their bins to the top, and movement may slow until farmers begin making buys. Dealers were topping off each time they made a sale to keep their supplies at the ready when the spring season starts in about two months.
Last week, CF hiked its DAP asking price in Central Florida from $615/st FOB to $630/st FOB, although no new prompt sales had been made at that level. Mosaic pulled back from making sales last week and was expected to have new prices by the beginning of this week. Those new prices will be based on sales on the export market – which means they will be going up substantially. PhosChem’s most recent export sale was done at $760/mt FOB, which would work out to a little better than $680/st FOB. That’s a lot, and it doesn’t seem Mosaic could get away with a bump of that magnitude without losing a lot of business. Of course, that was what people were saying when the price moved to $300/st FOB.
The big fear in the phosphate industry is the possibility of a sudden collapse in pricing. As phosphate prices have continued to rise, so has the cost of raw materials. If the price of phosphate takes a sudden dump, producers will have a huge investment in the inventory they will have already purchased, and the huge profits would dwindle. So far, that’s not a problem.
Last week, a trader sold DAP at prices ranging from $600/st FOB to $605/st FOB, which was well below CF’s and Mosaic’s asking price of $615/st FOB. However, the material was purchased earlier, so the deal provided a healthy return on investment.
The Central Florida DAP price range changed from a flat $615/st FOB the previous week to $600-$615/st FOB. Mosaic was posting an asking price for phosphates of $615/st FOB for DAP and $611/st FOB for MAP, but that will change before Green Markets is released this week. PotashCorp’s Central Florida reference price remained at $615/st FOB, and CF’s asking price was $630/st FOB for DAP and $627/st FOB for MAP. MAP supplies were said to be scarce. In Texas, Agrifos’s truck price stabilized at $680/st FOB, and its rail price at $675/st FOB for DAP last week.
U.S. Gulf: Activity slowed on the Gulf’s river system last week, but price hikes did not. The bottom of the price range increased an incredible $54/st FOB last week, and warehouse prices were cheaper than barge rates in most cases. That situation cannot continue for long. “Either warehouse prices are going to have to go up or barge prices are going to have to come down,” one trader commented. Most likely, warehouse prices will go up. However, in the St. Louis area prices of $645-$650/st FOB at warehouses appeared to be meeting with resistance. On the Arkansas, terminal prices were in the $655-$660/st FOB range.
Forward sales into March and April were bringing around $665/st FOB last week, and those will undoubtedly seem to be a bargain when delivery time rolls around.
Domestic prices continue to be driven by the export market, which was moving at rocket speed headed out of the solar system. Mosaic sat out of the market last week and planned to readjust its prices to better reflect the export market. That means another big jump. A week earlier barges from traders on the water had the effect of dragging down the price range; as they disappeared last week, however, they had the opposite effect.
Sales late last year have already outstripped the same period the previous year, as dealers and traders have both worked to keep their bins full of phosphates. That has led some in the industry to wonder if spring sales will actually be slower than normal, since much of the need will have already been met.
However, one trader said he made a sale the previous Friday at $665/st FOB for a DAP barge, then at $663/st FOB, and the last at $660/st FOB later last week. That could be an anomaly, because other deals seemed to be going in the opposite direction. It’s important to keep in mind that many of the barges being delivered last week were ordered as long as two months ago, and profits were so high a few dollars one way or the other was not important.
It’s expected farmers will continue buying phosphates as long as the price of grain, especially corn, remains high. Early last week the corn price sagged to around $4.80/bushel, but was rebounding toward the end of the week. Prices for wheat and soybeans also continue to be extremely high.
The NOLA DAP barge price range last week changed from $596-$635/st FOB the previous week to $650-$665/st FOB. Mosaic’s barge price last week was set at $635/st FOB and CF was at $640/st FOB; however, both are likely to be adjusted for this week. Upward, naturally.
Eastern Cornbelt: DAP and MAP were pegged at $650-$660/st FOB regional warehouses, reflecting another increase from the prior week. 10-34-0 was quoted at $535-$545/st FOB for very limited tons.
Western Cornbelt: The DAP market was quoted at $645-$655/st FOB regional warehouses, with MAP at $655-$665/st FOB. One Missouri supplier said an increase of $20/st would probably take effect late in the week, pushing dealer reference prices at his location to $665/st FOB for DAP and $675/st FOB for MAP.
10-34-0, where available, was pegged at $535-$550/st FOB in the region. Effective Feb. 1, Agrium’s phosphoric acid postings will jump significantly to $940/st rail-DEL for both super phosphoric acid and merchant grade acid in Iowa, Nebraska, and Missouri. Additional per month increases of $10/st are slated for both products in March, April and May.
California: Phosphate pricing was up dramatically from last report. Sources pegged the California MAP market at a firm $700-$705/st FOB or DEL, with DAP quoted at $715-$720/st FOB or DEL in the state. 16-20-0 was up significantly at $410-$425/st FOB, depending on location.
10-34-0 pricing was also on the move and in very tight supply. Sources tagged the low end of the market last week at $380-$391/st FOB, with an increase to $425/st FOB slated for Jan. 28 before firming to $430/st FOB on Feb. 1.
Agrium raised its MAP postings on Jan. 17 to $705/st FOB or rail-DEL in California and Arizona, up $40/st from the company’s Jan. 10 postings in the two-state region. Simplot made a similar increase on Jan. 18, with MAP moving to $705/st FOB or DEL and DAP to $720/st FOB or DEL in California and Arizona. Those levels were up $50/st from Simplot’s Jan. 8 DAP and MAP postings in the region.
Simplot’s TSP postings moved on Jan. 18 to $570/st FOB French Camp, Calif., up $35/st from the company’s Jan. 8 posting at that location. 16-20-0 moved up as well on Jan. 18 to $428/st FOB Lathrop, Calif., up $20/st from Simplot’s Jan. 8 listing at that location.
Super phosphoric acid (SPA) and merchant grade acid (MGA) remained at a firm $8.15/unit DEL for January. Effective Feb. 1, Simplot’s SPA and MGA postings will increase $1.25/unit across the board, in addition to the already scheduled dime/unit increase at that time. As a result, SPA and MGA postings from the company as of Feb. 1 will be at $9.50/unit rail-DEL in California, with warehouse postings moving on that date to $9.70/unit FOB Lathrop or El Centro, Calif.
Agrium’s phosphoric acid prices will also jump dramatically on Feb. 1 to $950/st rail-DEL for both SPA and MGA in California and Arizona. In addition, $10/st per month increases are slated for both products in March, April, and May.
Pacific Northwest: Simplot announced additional increases on its dry fertilizer postings, effective Jan. 18, with DAP and MAP moving up another $50/st from Jan. 8 pricing levels. Simplot’s TSP postings moved up $35/st on Jan. 18, with 16-20-0 postings increasing $20/st on that date from the Jan. 8 posted levels.
As a result, the Western Montana market as of Jan. 18 was posted at $690/st DEL for MAP, $705/st DEL for DAP, $525/st DEL for TSP, and $425/st DEL for 16-20-0. Eastern Montana prices as of that date include MAP at $705/st DEL and DAP at $720/st DEL. The Idaho market moved on Jan. 18 to $695/st DEL for MAP, $710/st DEL for DAP, $525/st DEL for TSP, and $425/st DEL for 16-20-0. In the rest of the Pacific Northwest, Simplot’s pricing structure moved on Jan. 18 to $700/st DEL for MAP, $715/st DEL for DAP, $525/st DEL for TSP, and $430/st DEL for 16-20-0.
Agrium announced a similar pricing track for MAP, following a Jan. 10 price increase with another on Jan. 17. The company’s Jan. 17 postings for MAP included $690/st DEL in Montana and Wyoming, $695/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County, and $700/st DEL and $695/st FOB in Washington, northern Idaho, and Oregon excluding Malheur County.
16-20-0 was tagged at $410-$415/st FOB and $425-$430/st DEL in the region, reflecting the new reference levels.
As for 10-34-0, sources said product was simply too tight to quote an accurate current market in the region. One speculated that the new price might be north of the $500/st FOB range given the higher acid and ammonia costs, but that was purely a guess. Suppliers were reportedly waiting until they have acid in the tank before quoting any new 10-34-0 pricing to the dealer.
Super phosphoric acid and merchant grade acid were quoted at a firm $8.15/unit DEL for January pricing, but several sources said new orders could not be placed at those levels now that much higher postings have been announced for February.
Effective Feb. 1, Simplot’s SPA and MGA postings will increase $1.25/unit across the board, in addition to the already scheduled dime/unit increase at that time. As a result, SPA and MGA postings from the company as of Feb. 1 will be at $9.50/unit rail-DEL in the Pacific Northwest. Also effective Feb. 1, Agrium’s phosphoric acid prices will jump dramatically to $950/st rail-DEL for both SPA and MGA in Washington, Oregon, Idaho, Montana, Wyoming, Utah, and Nevada. In addition, $10/st per month increases are slated for both products in March, April, and May.
Western Canada: MAP pricing was up dramatically at $710-$745/mt DEL in the region last week.
U.S. Export: Export phosphate prices continued as the primary driving force in the domestic market. Last week, Transammonia sold a “cargo load” into Central America at $745/mt FOB. Meanwhile, PhosChem sold 6,000 mt into Mexico at $760/mt FOB. Either this week or next, export prices will likely hit $800/mt or higher. At a recent meeting for the Latin American fertilizer industry, estimates were that the price of DAP could reach $1,000/mt, which was staggering – but then again, so was $760/mt.
By the end of February, PhosChem, Transammonia, and other offshore dealers will have some competition. The Fertinal phosphate plant in Mexico was expected to be shipping DAP by the end of February, and MAP and TSP by the middle of March. Phosphoric acid production will start at the end of this month. Initially, Fertinal will market primarily in Mexico, which will make its product cheaper than Tampa’s because of the significantly lower freight costs. The one disadvantage Fertinal will have against its American competitors is the price it pays for sulfur – currently around $500/t, compared to about half that for Tampa. Still, with world phosphate prices continuing to soar, it will be a profitable venture.
Warehouses in Brazil, Argentina, and Chile were full, but their season was just getting underway. If those don’t empty quickly, it could have a negative impact on export phosphate prices.
The export DAP price range last week moved up from $710-$720/mt FOB to $745-$760/mt FOB. Watch for prices to hit $800/mt FOB within a week or two.
POTASH
Eastern Cornbelt: Potash remained in very tight supply, and sources talked of spot warehouse pricing in the $445-$465/st FOB range.
Western Cornbelt: Potash pricing continued to firm out of regional warehouses, and inventories remained very tight. Sources quoted the spot market at $450-$500/st FOB in the region last week, with the upper end of the range reported for confirmed new sales for limited tons in Iowa. That range reflected another sizable increase from the previous week.
California: Potash remained in very tight supply. The regional market was quoted at $417-$445/st FOB, depending on grade, location, and supplier, provided tons could be had. One source quoted the upper end of the range for granular potash effective Jan. 14, but said available tons are reportedly booked through January and February.
Intrepid Potash’s postings FOB Bakersfield, Calif., will firm on Feb. 1 to $457/st for 62 percent white standard. The company’s potash postings FOB Chico, Calif., will move on Feb. 1 to $440/st for 60 percent white standard and $446/st for 60 percent white granular.
Potassium nitrate remained at $610/st FOB for bulk and $670 FOB for bags, but sources said last week that a significant pricing increase was imminent.
Sulfate of potash (SOP) was also up significantly from last report, and strictly allocated due to very tight supplies. The market as of Jan. 22 was quoted at $553/st FOB on granular and $541/st FOB on standard grade SOP. One source said his wholesale SOP costs would move on Feb. 1 to $608-$618/st FOB, with the upper end for granular product. He noted that SOP pricing increases since the first of December would likely add another $90 per acre in expenses for almond growers, who typically apply the product at a rate of around 800 pounds/acre.
Pacific Northwest: While some sources maintained that potash could still be had in the $369-$390/st DEL range in the region, others said tons in that price range were sold out and higher postings will be in effect for the next allocation.
Agrium announced new red premium potash postings for the March 1 forward shipping period. These include $431/st rail-DEL and $436/st FOB warehouse in southern Idaho, Utah, and Oregon’s Malheur County; $436/st rail-DEL and $441/st FOB warehouse in Washington, the Idaho panhandle, and Oregon excluding Malheur County and the Willamette Valley; and $441/st rail-DEL and $446/st FOB warehouse in Oregon’s Willamette Valley.
Effective Feb. 1, Intrepid Potash will hike its potash mine postings in Utah, with 60 percent granular potash firming $40/st to $397/st FOB Moab and $411/st FOB Wendover, and 60 percent standard potash moving to $391/st FOB Moab and $405/st FOB Wendover.
Western Canada: No current prices were reported for potash in the region.
Sulfate of Potash: Great Salt Lake Minerals Corp., a subsidiary of Compass Minerals, will increase prices on sulfate of potash (SOP) specialty fertilizer products by $120 per ton on all shipments effective Feb. 11, 2008. “Demand for sulfate of potash continues to grow along with demand for all potash fertilizers. Growers continue to prefer the quality and yield benefits that SOP brings to high-value and chloride-sensitive crops such as fruits, vegetables, tree nuts and turf,” explained Ron Bryan, vice president and general manager of GSLM. “This price increase will support our previously announced investment in a multi-phased plan to create additional SOP production capacity in Ogden, Utah.”
SULFUR
Tampa: After the major phosphate producers settled their first quarter contracts at $140/lt up from the previous quarter, sulfur suppliers were busy last week finalizing contracts with other consumers, most of which tend to match the increases phosphate producers agree to.
Otherwise, quiet settled over the industry last week. Refineries were running about the same, and no new major problems were reported. Sulfur supplies remained extremely tight.
The rumor of the sulfur vessel from the Black Sea, which was said to be headed to Beaumont for remelting and transfer to Tampa, remained afloat last week, although still not absolutely confirmed. If so, the ultimate price of the sulfur would be around $600/mt.
A sulfur source said some refineries were planning to reduce production of gasoline, which would have a resulting impact on sulfur production if that comes to pass. The reason given was the high price for oil and slightly lower prices at the pump. The move would ultimately increase the cost of fuel to consumers and ignite public antagonism, especially when the summer driving season arrives. Considering the astronomical profits oil companies have enjoyed for fuel and sulfur the past several years, and upcoming elections, it may not be the wisest decision they ever made.
The Aruba refinery downed by the suicide iguana earlier this month was expected to return to service by the end of January.
West Coast: Contracts between refineries and prill operators on the West Coast for first quarter contract prices had not been settled last week, but will probably result in an increase around $200/mt.
MARKET NOTES
Pakistan: Imports of DAP and other fertilizer during the first six months of the current financial year July-December 2007 stood at 1,110,518 mt DAP and other fertilizer at $528.777 million, compared to 834,433 mt at $232.461 million – showing a growth of 33.09 percent and 127.47 percent in term of quantity and value in dollar, respectively, versus the same period last year.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 60.78 | 57.34 | 33.80 |
| CF Industries | CF | 100.7 | 90.25 | 28.82 |
| Mosaic | MOS | 91.26 | 81.00 | 21.34 |
| PotashCorp | POT | 129.10 | 120.24 | 48.91 |
| Terra Industries | TRA | 43.00 | 40.27 | 13.80 |
| Terra Nitrogen | TNH | 136.30 | 123.90 | 36.60 |
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Distribution/Retail |
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| Andersons Inc. | ANDE | 43.77 | 44.35 | 39.69 |
| Deere & Co. | DE | 82.59 | 79.09 | 48.80 |
| Scotts | SMG | 34.12 | 32.74 | 53.71 |
| UAP | UAPH | 38.33 | 38.04 | 25.10 |