Regina-Liberal Party Leader David Karwacki on Oct. 17 proposed to fund some C$400 million in urban infrastructure investments by selling the province’s 49 percent stake in Saskferco Products Inc. According to the Star Phoenix, the Liberals say now is the time to sell as nitrogen is at the top of the cycle. The Mosaic Co. owns 50 percent of Saskferco, with another 1 percent owned by Citibank Canada.
All posts by traceybg@gmail.com
JPMC and Mitsubishi to build $300 M fert complex
Shidiya, Jordan-Jordan Phosphate Mines Co. and Mitsubishi Corp. have agreed to build a $300 million fertilizer complex near JPMC’s main phosphate mine in Shidiya, according to regional reports. The facility would produce 10,000 mt/d of phosphoric acid and 3,000 mt/d of sulfuric acid. Construction is expected to be complete by 2010.
Management Briefs
Del Braddock has joined Yara North America’s Eastern wholesale team as Midwest and South regional manager. Prior to joining Yara, Del held top management positions in the fertilizer divisions of Farmland Industries Inc., Agriliance LLC, and most recently with Interoceanic Corp. Del will report to Mike Hanson, vice president of Eastern Wholesale, and work in very close cooperation with his counterparts, Duncan Roberts, South Central and Southeast regional manager, and Gary Vogen, Cornbelt and Northeast regional manager.
Del will begin day-to-day activities for Yara on Nov. 5. He can be contacted at 913-341-7888.
In a move to further focus Agrotain International, L.L.C. on distributor and retail sales, Steve Phillips, vice president of North American agricultural sales, announces the creation of three divisions in the North American Agriculture Group. Along with the re-organization, three employees were promoted to directors. Jimmy Johnson, based in Collierville, Tenn., is the director of the new South division. Ben Thompson, from Rosemount, Minn., is the East division director, and will also assume the responsibilities of director, industrial division. Norm Davy, Winnipeg, Canada, is the director of the Pacific North division.
“As demand continues to grow for our Stabilized Nitrogen products, we believe that the market would be better served with the creation of three divisions within North America,” said Phillips. “With the rapid growth in Agrotain®, Agrotain Plus® and SuperU® sales and the increasing need for increased fertilizer use efficiency, I’m confident that our new directors and their teams will enable us to provide superior customer service to help farmers grow crops more profitably.” The three directors will be responsible for the 15 sales regions, and will report to Phillips.
Norm Davy has announced that Neil Yelland has been hired as the company’s regional manager in Saskatchewan. He will be responsible for sales and service in the province. Agrotain said with a background in retail, seed, crop protection, and the fertilizer industry, he is well versed in working with technologies that help farmers improve their bottom line. Yelland has experience with Bayer Crop Sciences, John Deere, Monsanto Canada, Zeneca Agro, and Mallard Petroleum.
The Western Plant Health Association has elected new board members and officers for 2008. The organization also presented service awards to a few of its members during its annual meeting, held Oct. 7-9 in Tucson, Ariz. WPHA officers elected included Kent Johnson of Ag Production Co. in Turlock as chairperson; Barry Powell of Calamco as vice chair; Brian Lish of BASF Corp. as secretary/treasurer; and Barbara LeVake of Trical, Bill Hume of Dupont, and Steve Gillette of PotashCorp sales as executive committee members.
The following were newly elected to three-year terms on the WPHA board of directors: Franco Campana of Monsanto; Ron Naven of Yara North America Inc.; Mosby Blanks of Helena Chemical Co.; Susan Ricketts of Bear River Supply Co.; Ray Maul of Kerman Ag Resources; and Dave Dufault of J.R. Simplot Co.
This year’s Integrity Award went to Ralph Iliff of NH3 Service Co., Salinas; the 2006 Lifetime Achievement Award went to Bill Miller, formerly of Wilbur-Ellis Co.; and the 2007 Lifetime Achievement Award went to Bob Smith of Calamco.
ISX Resources Inc., which is exploring potash reserves in Saskatchewan (GM Oct. 15, p. 14) reports that it is currently seeking a new director with potash and/or agribusiness experience. This follows the resignation of Damien Reynolds, director, who is leaving to focus on his flagship products, Longview Capital Partners Inc. and Kyoto Planet Group.
The new Shell Sulphur Solutions (GM Sept. 24, p. 10) has released its organizational chart. Leading the unit is Egbert Veldman, vice president, sulphur. Reporting to him are several general managers, including Patrick Romeo, strategy and marketing; Larry Marks, portfolio; Bryon Petti, supply and operations; Ken Keenan, sulphur sales; Loh Seng Yee, SEF (Sulfur Enhanced Fertilizer); MikeMartin, SEAM (Asphalt Modifier); and Alec Pannall, S-Concrete.
Martin Peilicke, 68, died unexpectedly on Oct. 6. He was active in the German potash industry for 38 years. From 1977-1991, he was director “Kontor Kali” of Kali-Bergbau in the GDR. In 1991, he became director of Kali-Export GmbH in Vienna. From 1995 to 2002, when he retired, he worked in a leading position at the international sales department at the K+S head office in Kassel.
Market Watch
AMMONIA
U.S. Gulf/Tampa: A great deal of movement in prices was reported last week. November business for Tampa was concluded at $322/mt DEL, up some $17/mt from October.
The quick price conclusion was a surprise to some, particularly in light of the prospects that phosphate producers will also see a hit from higher sulfur prices for the fourth quarter. Observers noted a slowing of product through the Bosphorus Straits, as well as lower inventories in other locations. Notably, PotashCorp is currently in the midst of a turnaround for one plant in Trinidad. The company’s number three plant went down Sept. 30 and is expected to be back up early the week of Oct. 22. The company estimated the outage will take about 25,000 mt of ammonia out of the market.
In the meantime, there were reports that Keytrade/CF had sold a cargo to PotashCorp for Geismar within the $320-$325/mt DEL range.
Word last week that prices were headed toward $290/st FOB has come to pass. Last week, new prompt business was put at $290/st FOB. By the end of the week, sources reported that another new sale had been concluded at $300/st FOB.
Eastern Cornbelt: The spot ammonia market was pegged at $515-$520/st FOB regional terminals, with reports that spring prepay was on the table in the $525-$530/st FOB range. At least one supplier at midweek was firmly at the top end of that range on any new prepay sales.
Western Cornbelt: The ammonia market remained in a fairly broad range at $505-$520/st FOB regional terminals, with the low in Nebraska and the upper numbers in Iowa and eastern Missouri. Several sources continued to talk of delivered material from production points in Kansas and Oklahoma available at lower levels, but no actual delivered prices were confirmed last week.
California: Anhydrous ammonia remained at $435/st truck-DEL and $450/st rail-DEL in the state. Agrium had reportedly firmed its ammonia posting to $445/st truck-DEL in California, and Calamco was slated to move its truck-DEL price up $10/st to the $445/st level Nov. 5.
Pacific Northwest: Anhydrous ammonia pricing had reportedly firmed to $475-$485/st FOB and $485-$505/st DEL in the region, and was in tight supply. The low end of the delivered range was quoted for railed product, with the upper end reflecting the truck-DEL price.
Agrium’s anhydrous ammonia postings firmed on Oct. 1 to $485/st rail-DEL and $505/st truck-DEL in northern Idaho and in Oregon and Washington east of the Cascades, and $520/st truck-DEL in Montana and Wyoming. Those levels represent a $30/st increase from the company’s Sept. 18 reference prices. Aqua ammonia postings from Agrium also firmed on Oct. 1 to $127/st FOB Central Ferry and Finley, Wash., up $8/st from Sept. 18.
Western Canada: The Western Canada anhydrous ammonia market was quoted at $684-$729/mt DEL at mid-month, but sources said another increase late in the week would push the regional market to $702-$737/mt DEL to the dealer.
Southeast: PotashCorp’s Augusta plant went down for a planned four-week turnaround during the weekend of Oct. 13. It is the first turnaround at the plant in six years. The outage will take some 57,000 mt of ammonia out of the market; however, virtually all of the product is used for upgrading. PotashCorp said all customer needs are being met.
Black Sea: Doing the math from Tampa, observers say the price should be in the upper $240s/mt FOB to the lower $250s/mt FOB. Asian sources, however, are hard pressed to find any deal for less than $260/mt FOB. Rumors of a deal at $260/mt FOB are rife in Asia, but no one can point to a specific deal at that level. The conventional wisdom puts the price range at $260-$270/mt FOB.
Middle East: With Iran back at full urea production, ammonia from that country has plunged the area back to the tight market days of January.
The Ghadir Petrochemical Co. closed down urea production in mid-summer. With that closure, extra ammonia quickly became available for export. Yara and Transammonia took advantage of the extra tons. They both secured cargoes for European buyers at more than reasonable rates.
The presence of the Iranian tons also put a dent in the pricing ideas of area producers. Prices have stagnated in the low $240s/mt FOB for a while.
With the withdrawal of about 60,000 mt of ammonia, prices began to move up.
Earlier this month Mitsui settled a cargo at $240/mt FOB with Qafco. This past week they did another deal with Sabic at $245/mt FOB.
Producers are clearly pleased with the turn of events in pricing, but not so pleased with shipping issues.
Vessels that were once plentiful for the Middle East suppliers now have to go far and wide to pick up cargoes for buyers.
One Asian trader said the ships that went to Europe from Iran are now booked for East Asia to get tons from Malaysia or Indonesia.
A similar situation exists with shipments outside the contracted tons for Asian buyers.
Adding to the problem, said one observer, are reports that LPG is quickly becoming a more lucrative market than ammonia. Vessels are now reportedly being diverted to the gas shipping trade and away from ammonia.
Suddenly, this trader said, there exists a real possibility of a vessel shortage in the Middle East.
Asia: Sales from Malaysia and Indonesia remain firm. Sources say cargoes from MITCO are headed for Paradeep.
KPA in Indonesia will most likely shut down this week for routine maintenance. Sources at the company say they do not see any reason the turnaround should be extended past its estimated three to four weeks.
Just as KPA comes back up, KPI is slated to go down for its routine maintenance check.
The major buyers in Taiwan and South Korea continue to take contracted tons from Asia and the Middle East. Sources say complaints of higher prices are hardly heard, because the downstream customers are also doing well and can absorb the incremental increases that have been taking place.
UREA
U.S. Gulf: An influx of vessels into NOLA and a slowdown in traffic going upriver has caused prices to stall at NOLA after a long heated run of price hikes. Last week players were putting the last done granular barge sales within the $355-$358/st FOB range.
Some sellers continued to be stoic, saying there was no need for prices to fall. They said that vessels currently in NOLA are regular milk run cargoes, nothing spot. They saw no reason for prices to fall, and said they would soon rebound. There was some suggestion that any talk of lower prices was being spurred by Chinese product being in the market, but others denied this assessment.
Another group saw profit taking in the market, with some sellers more than happy to cash in after a long run of price spikes. They said sellers would have to drop quotes if they wanted to make a sale.
Eastern Cornbelt: Granular urea was pegged at $390-$395/st FOB in the region, up slightly from last report, although sources reported few new sales to test the market.
Western Cornbelt: Granular urea was pegged at $390-$400/st FOB, up slightly from last report, with the upper end reflecting dealer list prices at some locations. The dealer market FOB Tulsa, Okla., had also reportedly firmed to the $380-$385/st level last week.
California: Granular urea was pegged at $400-$415/st FOB and $420-$435/st DEL in the state, up roughly $20/st from last report. Agrium’s urea postings moved on Oct. 9 to $415/st FOB West Sacramento, Calif., $435/st DEL in Central California, and $440/st DEL in Northern California. Another supplier was slated to move its urea posting in the region up to $430/st FOB effective Oct. 22.
Pacific Northwest: Granular urea pricing was quoted at $415-$425/st DEL in Montana and $435-$440/st DEL in the rest of the region, up $20-$25/st from last report. Agrium’s urea postings firmed on Oct. 9 to $410-$425/st DEL in Montana and Wyoming, depending on location; $435/st FOB Washington warehouses at Glade, Kennewick, Warden, and Wilson; $440/st DEL in Washington, northern Idaho, northern Nevada, and Oregon excluding Malheur County; $450/st DEL in northern and central Utah; and $455/st DEL in southern Utah. Those postings represent a $15/st increase from the company’s Oct. 1 urea postings.
Western Canada: Sources tagged the granular urea market at $475-$500/mt DEL in the region, with another $15/mt increase slated for Oct. 18.
Alaska: Agrium’s Kenai plant officially stopped production Sept. 28. However, the company said it still has product in inventory for shipment. Layoffs at the facility will begin in early December.
Black Sea: Seeing the potential for being shut out of any possible end-of-year deals with India, the KIP was dropped to $282/mt FOB.
Asian sources said that deals done at that level out of Yuzhnyy could be competitive in any upcoming Indian business.
Apparently, the Indians have moved to the $350s/mt CFR in their pricing ideas for future tons. If that holds, sources say a $282/mt CFR could easily be delivered by panamax to India at $350/mt CFR.
One Asian trader noted that without lowering the KIP, the Yuzhnyy suppliers would have been shut out of the only business left for 2007.
While no business has been concluded at the new lower level, sources say it will only be a matter of time before someone bids at the KIP and holds firm. Some might even argue for a lower price.
Producers will most likely have no choice but to accept the bids at the new level. One observer noted that producers might be willing to grab a $282/mt FOB before the government lowers the KIP further.
India: Late Friday, IPL called a tender to close Oct. 23. As usual, the tender calls for granular or prilled urea. No specific quantity was requested. The tender call was expected, but the surprising thing was how soon it was called.
Besides the conventional wisdom that India needs upwards of 1 million mt by the end of the year, the rumors that IPL picked up Middle East tons at $333/mt FOB had the industry buzzing. At first, some sources speculated the purchases were post-tender tons. Later, the view switched to seeing the deal as a pre-tender arrangement. Once the freight package is added in, the $333/mt FOB from the Middle East signals India’s willingness to pay a higher rate this time around.
In the past, IPL has gone door to door securing cargoes before calling a tender. The tender will then validate the price negotiated.
The calling of the tender came on the heels of reports out of Yuzhnyy that the KIP was lowered to $282/mt FOB. At that price, the Indian buying levels begin to match the possible selling level out of the Black Sea.
It now appears as if material from the Middle East, China, and the Black Sea will be able to compete for the Indian business.
Calling the tender by Nov. 1 was vital, said one source. To take advantage of the lower Chinese product, the tons have to be booked and shipped by the end of the year. After Jan. 1 the export duty on Chinese urea jumps back up to 30 percent from its current 15 percent. Sources say the Indian buyers are anxious to secure as many tons as they can for shipment by the end of the year.
Once this last round of buying is concluded, sources say Indian buyers will most likely go dormant until April or May.
The number of tons taken in the tender will depend on the price, but sources’ estimates of India’s need range from 500,000 mt to 1.1 million mt.
Middle East: Rumors are circulating that IPL secured additional tons from a Middle East supplier at $333/mt FOB. Others have said the price was closer to $335/mt FOB. No matter what the price, observers say, two things are evident: the Middle East price has moved up, and the producers are not getting what they wanted.
Offers in the previous IPL tender from Arab Gulf producers were at nearly $350/mt FOB for prills or granular. When IPL rejected that level and settled for the cheaper Chinese tons, sources said it would only be a short while before the Middle East producers lowered their prices.
Now that IPL has called a tender, sources expect to see a number of tons flow out of the Middle East to India.
If the pre-tender deals hold, the indicated price will rise – but still not as high as producers had hoped.
India remains the best choice for Middle East cargoes because of its proximity. Cargoes can be sent in multiple sized vessels, while shipments from the Black Sea are relegated to panamax ships. Chinese tons can also be sent in different sized ships, but the steaming time from the Middle East to India remains the best.
Posted prices in the area have hovered in the $320s/mt FOB for a while. Observers note that many of the tons that were shipped out were under long-term contracts with prices kept under wraps.
The single largest buyer from the region has been the U.S. market. Sources say shipments to the States are expected to taper off in the next few weeks, leaving producers with the daunting task of finding a home for their material with few options available.
Sources say the lowering of the KIP, which could put Black Sea urea into play for any future Indian business this year, appeared to be the final stroke that caused area producers to lower their prices.
Even without the Black Sea move on pricing, sources say Arab suppliers faced a new challenge as the Ghadir Petrochemical plant came back online in Iran. The facility has been down since mid-July. The company announced it was back in production Oct. 15. Reportedly, the first 10,000 mt has already moved to warehouses from the plant. Production capacity is put at 1 million mt/year.
Bangladesh: The country plans to import 300,000 mt of urea instead of the 162,500 mt of urea tendered earlier. An additional approximately 137,500 mt of urea will be imported to meet the growing demand of urea.
Indonesia: Kujang is expected to call a selling tender this week for about 20,000 mt. Once that is done, sources say Indonesia will remain quiet until the new year. All export permits reportedly have been used up and the paperwork to issue new ones is winding its way through the Indonesian bureaucracy. The tender is not expected to show a stable market.
NITROGEN SOLUTIONS
U.S. Gulf: Barge prices continue to be strong despite a fall-off in urea barge prices. Sources call the current market $282-$285/st FOB ($8.81-$8.91/unit). Reports circulated that Helm bought a cargo in an Egyptian tender for $280/mt for Europe. Sources said it would cost around $295/st FOB to get this cargo to NOLA.
Eastern Cornbelt: UAN-32 remained at $310-$320/st ($9.69-$10.00/unit) FOB regional terminals, with the upper end reflecting dealer reference levels.
Western Cornbelt: UAN-32 pricing was quoted in a broad range at $305-$320/st ($9.53-$10.00/unit) FOB terminals, with the low out of spot locations in Nebraska. Reference pricing out of at least one Missouri River location was reported firmly at the $310/st ($9.69/unit) FOB level last week, and Iowa sources also reported spot quotes at the $9.80/unit FOB mark to the dealer.
California: UAN-32 was up significantly from last report. The California market was tagged at $320-$340/st ($10.00-$10.63/unit) FOB in the region, with the upper end reflecting dealer reference pricing and the low confirmed after discounts. Delivered UAN-32 was pegged at $340-$350/st ($10.63-$10.94/unit) in the state. Effective Oct. 19, Agrium’s UAN-32 posting FOB Sacramento firmed to $343/st ($10.72/unit). Truck-DEL UAN-32 postings firmed on that date to $360/st ($11.25/unit) in Central California and $365/st ($11.41/unit) in Northern California.
Pacific Northwest: The UAN-32 market was pegged at $325-$335/st ($10.16-$10.47/unit) DEL in the region last week, up $15-$20/st from last report. Still higher postings were on the way as the week advanced.
Effective Oct. 9, Agrium’s UAN-32 postings firmed to $325/st ($10.16/unit) DEL in northwestern Oregon, Washington, and northern Idaho. Another increase on Oct. 19 brought the regional UAN-32 postings to $335/st DEL in most of Oregon, Washington, and northern Idaho; $340/st rail-DEL and $345/st truck-DEL in southern Idaho, Oregon’s Malheur County, Nevada, and Utah; and $365/st truck-DEL in Montana and northern Wyoming. Agrium’s UAN-28 postings in Montana and northern Wyoming firmed on Oct. 19 to $319/st truck-DEL.
Western Canada: The regional UAN-28 market was pegged at $301-$317/mt ($10.75-$11.32/unit) DEL, with an increase to $311-$326/mt ($11.11-$11.64/unit) slated for Oct. 18.
AMMONIUM NITRATE
U.S. Gulf: Like UAN, price ideas remain high. Sources called the last done business $285/st FOB, with quotes now in the $290-$295/st FOB range for the next round of business.
Western Cornbelt: Ammonium nitrate was pegged at $325-$330/st FOB, up slightly from last report, with the upper end reported in Missouri. Effective Oct. 22, Terra’s ammonium nitrate postings will move up to $315/st FOB Yazoo City, Miss., and $328/st FOB McComb, Miss.
California: No market was reported for ammonium nitrate in California. CAN-17 pricing was reportedly up to $240-$265/st FOB, with the low at Stockton and the upper end in desert areas of Southern California. Most shipping points in the state fell in the $240-$250/st FOB range at mid-month.
Pacific Northwest: Ammonium nitrate pricing remained firm at $375/st DEL in Montana and $395-$405/st DEL in the rest of the region. Agrium’s ammonium nitrate solution (20-0-0) postings moved on Oct. 19 to $205/st FOB Kennewick for the Washington, Oregon, Idaho, Nevada, Utah, Wyoming, and Montana sales area.
CAN-17 was quoted at $237-$247/st FOB in the Pacific Northwest region last week. Agrium’s CAN-17 postings moved on Oct. 19 to $247/st FOB Kennewick.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was steady at $230-$240/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate remained in tight supply at $225-$230/st FOB in the region. Delivered granular sulfate was referenced from Agrium at $235/st in Nebraska.
California: Granular ammonium sulfate was $220-$240/st FOB, depending on location, with tight inventories at some shipping points.
Pacific Northwest: Granular ammonium sulfate was pegged at $240-$250/st DEL, up $15/st from last report. Inventories were described as very tight and shipments heavily backlogged, with no shipments taking place out of Trail, B.C., last week.
Effective Oct. 12, Agrium’s ammonium sulfate postings firmed to $245/st DEL in Montana and Wyoming; $240/st FOB and $245/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; and $240/st FOB and $245/st DEL in Washington, northern Idaho, and Oregon excluding Malheur County.
Western Canada: Granular ammonium sulfate was quoted at a firm $315-$320/mt DEL last week, up $10/mt from Oct. 1 pricing levels.
PHOSPHATES
Central Florida: In the Central Florida phosphate market, inventories remain low and prices continued to rise last week. For the past several months, even as prices rose, no one in the industry was quite sure of how the end users – farmers – would react to the new much higher market. Some feared they would cut back on applications, but others disagreed. The disagreers were right. Apparently the high prices for wheat and corn have been sufficient to keep farmers coming back for more, and warehouses were quickly running dry around the country. For some, that’s a problem, because they did not reorder in time to make up the shortfall.
Unit trains were no longer available out of Central Florida through April, and single-car shipments were on their way to becoming scarce. For buyers closer to the source, trucks could become the only means of moving phosphate out of the area.
Last week, Mosaic made sales at the new price it posted a couple of weeks ago, $395/st FOB, so the company moved the price up another $10/st FOB last week to $405/st FOB. Also last week, CF increased its price from $390/st FOB to $395/st FOB.
The Central Florida DAP price range moved to a flat $395/st FOB from $390-$395/st FOB the previous week. Mosaic’s posted price increased $10/st FOB to $405/st FOB for DAP and $401/st FOB for MAP. CF’s price jumped to $395/st FOB from $390/st FOB for both DAP and MAP, and PotashCorp’s Central Florida reference price also went from $390/st FOB to $395/st FOB. In Texas, Agrifos’ DAP truck price was $440/st FOB, and $425/st FOB for railcars, but railcars were sold out until January, while trucks were still available.
Eastern Cornbelt: DAP was pegged at $435-$445/st FOB, with the low out of spot river locations in Illinois and the upper numbers inland. MAP was $435-$443/st FOB, and the 10-34-0 market was quoted at $380-$390/st FOB in the region.
Western Cornbelt: DAP remained at $435-$445/st FOB, with the upper end reflecting updated dealer postings at some regional locations. MAP was pegged at $435-$442/st FOB. 10-34-0 remained in tight supply at a firm $385-$395/st FOB in the region, with some talk of a $400/st market in the near term.
California: MAP pricing was up $10/st from last report at $470-$475/st FOB or DEL, with DAP $7/st higher. Agrium’s MAP postings firmed on Oct. 12 to $470/st FOB or rail-DEL in California and Arizona. 16-20-0 was quoted at $315-$320/st FOB and a solid $320/st DEL, also up from last report. 10-34-0 remained at $319-$326/st FOB in the state, but another increase is expected Nov. 1.
Phosphoric acid prices were quoted at $7.15-$7.25/unit DEL for merchant grade acid (MGA) and a solid $7.25/unit DEL for super phosphoric acid (SPA). Another dime/unit increase for both products is slated for Nov. 1. Agrium’s phosphoric acid prices for Nevada and California will move in November to $725/st rail-DEL for MGA and $735/st railDEL for SPA, with a $10/st increase scheduled for Dec. 1.
Pacific Northwest: MAP was pegged at $460-$470/st FOB or DEL in the region. The low was reported in western Montana, with most of the rest of the region firmly in the $465-$470/st DEL range. Agrium’s MAP postings firmed on Oct. 12 to $460/st DEL in Montana; $465/st DEL in southern Idaho and Utah; and $465/st FOB and $470/st DEL in Washington, Oregon, and northern Idaho.
DAP was $7/st higher than MAP, with the low end again reported in western Montana. 10-34-0 remained in very tight supply at $335-$345/st FOB in the region, up $15/st from last report. 16-20-0 was pegged at $310-$320/st DEL in the region, with the lower numbers reported in Idaho and western Montana.
Super phosphoric acid (SPA) was quoted at a firm $7.25/unit DEL in the region, with merchant grade acid (MGA) pegged at $7.15-$7.25/unit DEL. One supplier was scheduled to move to $7.35/unit DEL for both products Nov. 1, with another dime/unit increase slated for December.
Agrium’s phosphoric acid prices in Washington, Oregon, Idaho, Montana, Wyoming, and Utah will increase $10/st in November to $725/st rail-DEL for MGA and $735/st rail-DEL for SPA, followed by another $10/st increase in December.
Western Canada: MAP was tagged at $540-$575/mt DEL in the region at mid-month.
U.S. Gulf: After Mosaic held its fall fill program and then moved the price up to $415/st FOB NOLA, expectations were that those who needed to buy had done so. The following week, sales declined. Then, last week, warehouses began to empty faster than a NASCAR race, and barge reordering shot up. For some, it may be too late to get enough to meet the demand of dealers and farmers before the season is over, due to transport time. Those who were able to buy were paying a premium – many as high as $420/st FOB. Mosaic, which doesn’t have much left to sell on the river, quickly increased its asking price to $425/st FOB last week. CF, which was sold out through October, increased its November-December price by $5/st FOB to $420/st FOB, with $425/st FOB for January, sold out for February, and $430/st FOB for March and April. Don’t be surprised if CF hikes its price again before any of those new prices can take effect.
Meanwhile, prices at warehouses, which were the driving force behind the barge price bumps, rose more slowly, and last week were at $435-$445/st FOB. Those prices will increase as the new, more expensive barges arrive.
Normally – and nothing is normal anymore – the upriver north of St. Louis closes about Oct. 15, which was last week. It did not. Ice was not, and was not likely to be, a problem anytime soon. The only thing that will close the river will be the Corps of Engineers and its lock maintenance schedule.
MAP supplies were virtually nonexistent last week and probably will remain so until sometime in December. In most cases, MAP prices were equal to DAP – with the exception of Mosaic, which was apparently out of the product.
One trader on the Arkansas River said other traders were offering to buy all of the DAP they had at their terminals at the retail price in order to make up for their shortfall. The answer was, “No way.”
One buyer got lucky this past week and bought at only $3/st FOB over the previous week’s high in the range. However, most of the transactions were in the $415-$420/st FOB range.
The NOLA DAP barge price range last week, based on actual sales, was $408-$420/st FOB, one of the widest spreads in a long time. Wide disparities in prices occur when the market takes sudden, unexpected jumps, as happened last week. This week, expect prices to be closer to the top of last week’s range.
Correction: NOLA DAP barges were $405-$415s/t FOB for the Green Markets dated Oct. 15. This ran in the text; however, it was not adjusted for the Price Scan pages.
U.S.Export: No new phosphate sales from North America were found last week, but the export shipping schedule was already bursting at the seams. The best market continued to be Latin America, due to the extremely high ocean freight rates. When sales resume, they will likely take a bite out of FOB prices, which were as high as $450/mt FOB last week.
A source said China may seek to sign a contract to deliver phosphate there during next year. China is an exporter, but importing phosphates is necessary because of rail freight rates within the country.
TFI released its report on exports of phosphates in September last week. No surprise, India topped the list of DAP buyers at 354,816 mt, with Japan a distant second at 32,628 mt, and Mexico following at 19,262 mt. Exports for the month totaled 497,389 mt, a decline of 10.7 percent over September 2006. For the calendar-year-to-date, India was the leader at 1,243,942 mt, Mexico second at 302,387 mt, and China a close third at 291,695 mt. Total DAP exports through September amounted to 3,319,040 mt, a decline of 27.7 percent from the same period a year ago.
TFI reported Canada was the biggest MAP customer in September, taking 72,906 mt; Brazil was next at 66,608 mt, and Australia was the third largest buyer at 31,267 mt. The total MAP exports for September were 248,794 mt, an increase of 19.3 percent compared to the same month last year. For the calendar-year-to-date, Canada was the number one buyer at 547,914 mt, Brazil was second at 261,332 mt, and Argentina third at 216,315 mt. Total MAP exports so far this year were 1,652,133 mt, which represented a decrease of 5.9 percent from the same period in 2006.
The DAP export price range was unchanged last week at $440-$450/mt FOB.
POTASH
Eastern Cornbelt: Potash was pegged at $300-$305/st FOB, where available, with reports of some locations now referenced as high as $325/st FOB for spot granular tons. Potash inventories remained in extremely tight supply in the region.
Western Cornbelt: Potash remained in very tight supply, with the market quoted at a firm $295-$305/st FOB range in the region. Effective Nov. 5, potash postings from Intrepid Potash FOB Carlsbad, N.M., will move to $264/st for 62 percent standard, $267/st for 60 percent granular and 62 percent fine standard, and $272/st for 62 percent granular. Intrepid’s postings FOB Moab, Utah, will move to $267/st for 60 percent granular and $261/st for 60 percent standard, and potash postings FOB Wendover, Utah, will move on Nov. 5 to $275/st for 60 percent standard and $281/st for 60 percent granular.
California: Potash pricing continued to firm. Sources quoted reference prices now at $308-$314/st FOB in the state, depending on grade, with the upper end for granular product. The low end of the range was put at the $292-$300/st FOB mark after discounts, but potash remained in very tight supply.
Potassium nitrate was pegged at $520/st FOB for bulk and $580/st FOB for bags, with almost all current sales reportedly taking place in bags. Another pricing increase is likely soon, sources said.
Pacific Northwest: Most sources tagged the current potash market at $294-$310/st FOB, depending on grade and location, with rail-DEL 62 percent potash quoted at $305-$313/st. There were reports from some sources of spot deals on granular potash still circulating last week in the $280s/st FOB, but actual product availability and confirmed sales at
those lower numbers were not available.
One Washington source said K-Mag pricing had firmed to $253/st FOB the terminal, with another $15/st increase slated for Jan. 15, 2008.
Western Canada: No current prices were reported for potash in the region due to very limited availability. Some producers had reportedly pulled their regional potash prices due to strictly allocated inventories.
SULFUR
Tampa: According to several sources who attended a golf outing for sulfur buyers and sellers a couple of weeks ago, a phosphate company representative inquired what number the seller was asking for the fourth quarter. When the seller told him $53/lt, the conversation quickly switched from cordial to confrontational, including expletives. That answer may have affected the buyer’s appetite at the fish fry. For the phosphate industry, the word just kept getting worse. Another sulfur seller said he was asking $2-$3/lt more than the first. Sources said the phosphate industry had kicked up its offer from an increase of $5/lt to the low teens. To say buyers and sellers are far apart is like saying the nearest galaxy is a hop, skip, and a jump away. Odds are the settlement will not be quick this time around.
In reality, exactly what is the sulfur industry going to do if they cannot reach an agreement? Cut off the phosphate industry? Hardly. Only one of the two prill plants on the Gulf Coast was in operation last week, and it could not possibly produce enough for export to make up the vast amount that goes to Tampa. On the other hand, the phosphate industry has been making more money this year than it ever has, and can afford to pay more. The solution is somewhere in the middle.
Sometime, maybe next year or the year after, sulfur will take a tumble. When it does, “The meaner and faster it will fall,” a sulfur source said.
Another source pointed out that Canada will likely reduce the amount of rail shipments it makes into the U. S. for 2008 in order to take advantage of the much higher world market. That will put pressure on prices in this country.
West Coast: On the West Coast, somez fourth-quarter sulfur contracts from refineries to prillers have been settled at between $10-$20/t up, but others were still talking. The price for prill destined for China was said to be between $120/mt and $140/mt FOB. Ocean freights from California to China were running about $100/mt late last week, which would bring the price China will pay to around $220/mt DEL.
Vancouver: China has apparently agreed to pay $220/mt DEL for sulfur shipped from Vancouver for the fourth quarter, which would put the FOB price somewhere between $120/mt and $170/mt, depending on the sellers’ contracts for ocean freight. Spot freight prices were running about $100/mt from Vancouver to China late last week.
MARKET NOTES
India: The government is likely to introduce a reverse-bidding process for setting up greenfield urea plants. Under the new regime, aimed at rationalization of the burgeoning fertilizer subsidy, the government will invite global tenders from companies interested in setting up plants on identified lands in the agriculture heartland. The company that quotes the lowest urea price will be given priority on agreed terms and introduce an element of certainty about the projects’ size, said Department of Fertilizer (DOF) sources.
These units will be provided gas at reasonable cost, which will be a pass-through feature. Similarly, traders may also be allowed to participate in the bidding system – provided they guarantee assured supply on agreed terms. A draft note has already been circulated among the stakeholders in this regard. “The formula is a key component of the proposed investment policy, to be announced soon, on which subsidy for the plant will be decided,” confirmed a senior DOF official.
Under the new investment policy, the government plans to bring in an investment of about Rs 300 billion, he said. This kind of investment can add an additional 10 million mt/y of urea domestically, reducing dependence on imports substantially. The move is significant, as the country will import about 6 million mt this year and the Planning Commission projects an increase to 30 million mt/y in the domestic capacity by the end of the 11th Plan period, from the existing 20 million mt/y.
India: The DOF and the Union Agriculture Ministry are looking at expanding the scope of subsidy to all fertilizers in the Fertilizer Control Order (FCO). “At the moment, the subsidy exists for only 11 complexes and three fertilizers,” said an official. “But both the DOF and the Agriculture Ministry want the subsidy regime to be extended to the 200 fertilizers and complexes which are a part of the FCO. This is being done to shift to the nutrient-based subsidy regime which is under the consideration of the Group of Ministers (GOM).”
Currently, the subsidized fertilizers contain only the primary soil nutrients – nitrogen (N), phosphorus (P), and potassium (K). Experts say that the current subsidy regime has not only led to an overuse of the primary nutrients, but has resulted in the secondary and micronutrients being neglected. “The move will also help farmers to have the flexibility to choose the fertilizer as per the need of the crop. It will also enable them to change the fertilizer depending on the soil pattern,” an official said. Meanwhile, the DOF will be asking the Finance Ministry for Rs 114bn in the second supplement.
The increase in the cost of gas and urea has pushed up the fertilizer subsidy for the current financial year to Rs 480 billion, of which the government has allocated Rs 224.5 billion in the budget and the DOF has Rs 150 billion in the first supplement. “We have sent the proposal to the Finance Ministry and we are awaiting their response,” said an official on Oct. 16, who also said that they expect the Rs 75 billion bonds that were part of the first supplement to be released in the next couple of days.
Prague: Chemoporjekt, a Czech-based chemical plant designer, has signed contracts to build new nitric acid plants in France and Hungary, according to the Prague Daily Monitor. The French plant would be near Roeun for Grande Paroiss, a unit of Total, and would produce 1,500 mt/d. The French contract was for US$71.5 million. The Hungarian plant would be for BorsodChem. Chemoporjekt had not returned inquiries at press time.
Warsaw: Poland faces a premature parliamentary election on Oct. 21 that may decide the future of the privatization of chemical and fertilizer industries. During pre-election campaign the ruling right-wing party of Prime Minister Jaroslaw Kaczynski declared that privatization of Polish industry was “disastrous” and caused “losses of national treasury.”
The Week in Fertilizer Stocks
| Company Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 56.99 | 54.47 | 28.64 |
| CF Industries | CF | 77.81 | 71.07 | 18.83 |
| Mosaic | MOS | 63.32 | 59.23 | 17.25 |
| PotashCorp | POT | 111.83 | 109.35 | 37.38 |
| Terra Industries | TRA | 34.61 | 31.50 | 8.69 |
| Terra Nitrogen | TNH | 122.60 | 126.22 | 26.37 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 49.21 | 46.35 | 36.57 |
| Deere & Co. | DE | 152.55 | 152.78 | 87.74 |
| Scotts | SMG | 42.52 | 44.16 | 46.07 |
| UAP | UAPH | 30.16 | 30.55 | 23.97 |
SPOT BARGE PRICES
Mosaic reports best earnings in three-year history
The Mosaic Co. reported the best earnings in its three-year history for the first quarter ending Aug. 31, 2007. Net earnings were up 180 percent, to $305.5 million ($.69 per diluted share) on a 55 percent uptick in sales to $2.0 billion, versus the year-ago $109.0 million ($.25 per share) and $1.29 billion, respectively.
First-quarter gross margin was $521.8 million, or 26 percent of net sales, compared with the year-ago $196.3 million, or 15.2 percent. Operating earnings were $449.6 million versus the year-ago $131.6 million. The increases in margins and operating earnings were primarily the result of higher selling prices for phosphates and potash and an increase in volumes in the potash business.
“Our robust earnings and cash flow during our first quarter demonstrate that we are successfully positioning ourselves to take advantage of strong agricultural fundamentals,” said Jim Prokopanko, Mosaic President and CEO. “Strong cash flow has allowed us to prepay $700 million of long-term debt over the last five months, and we expect to make additional prepayments in coming months. This will move us closer to our goal of achieving investment grade status.”
Phosphate operating earnings were up 274 percent, to $310.2 million versus the year-ago $82.9 million, while sales were up 50 percent, to $1.18 billion from $789.6 million. The average DAP price during the quarter was $407/mt versus the year-ago $251/mt, while Central Florida ammonia and sulfur were both up at $326/mt and $77/lt, respectively, versus the year-ago $301/mt and $72/lt. Total phosphate sales volumes for the quarter were actually down 2 percent, to 2.24 million mt from 2.29 million mt.
Potash operating earnings were up 81 percent, to $110.2 million from the year-ago $60.8 million, while sales were up 42 percent, to $411.8 million from $290.1 million. Potash sales volumes were up 24 percent during the quarter, to 2.08 million mt from the year-ago 1.68 million mt.
Offshore and nitrogen segment results both pulled out of the loss column during the quarter, with offshore operating earnings at $30.1 million on sales of $497.5 million, versus the year-ago loss of $3.6 million on sales of $303.9 million. This increase was mainly due to higher sales volumes and selling prices in Brazil, India, and Argentina.
In the meantime, higher urea prices helped the nitrogen segment post positive operating income at $1.7 million on sales of $35.1 million, versus the year-ago loss of $100,000 on sales of $21.1 million.
Mosaic continues to have an upbeat outlook, citing tight supplies of phosphate and potash. The company said at the end of August combined MAP and DAP inventories were at their lowest level for this period in over 15 years, and potash inventories had declined 42 percent compared to year-ago levels.
“Grain markets continue to remain tight and commodity prices remain at very attractive levels, resulting in strong farm economics and demand for crop nutrients,” said Prokopanko. “In order to meet this strong global demand, we continue to operate our plants at high operating rates. Prices for phosphates remain strong and prices for potash have increased, which should result in very strong earnings and cash flow for the remainder of fiscal 2008.”
Prokopanko told analysts U.S. corn acreage could drop back to 88-90 million acres next year, though he said a lot could happen before those figures are finalized.
He believes the market can absorb near-term increases in phosphates from OCP and Fertinal, with China being a possible wildcard. He speculated that China may have sold too much product on the export market and not kept enough for the domestic market. He said India will continue to be a strong market for phosphates, especially since it is struggling with its own domestic production.
Prokopanko said the rising price of phosphate rock will not have a material impact on Mosaic, that instead it increases the value of Mosaic’s own reserves.
On potash, Prokopanko expects an early decision on 2008 prices to China, with expectations that Canpotex will close the gap between what China is paying versus the rest of the world. He noted that by the end of the year Brazil will be paying $355/mt DEL, versus a year-ago $185/mt DEL.
Tesssenderlo to acquire Ag Formulators, Best Sulfur Products
Tessenderlo Kerley Inc. (TKI), Phoenix, and Ag. Formulators Inc. (AFI), Fresno, have announced they have completed discussions and executed documentation for TKI to acquire essentially all of the assets of Ag Formulators/Best Sulfur Products (BSP) based in Fresno, Calif.
“BSP has been a strong influence in the market and TKI has the utmost respect for the people of BSP,” stated Jordan Burns, TKI CEO. “This purchase will enable TKI to again become a California-based producer, allowing for increased production and improved logistics to better serve the combined customer base within the state and surrounding areas.”
BSP began business in 1992 focusing on the contract formulation business, and later as a manufacturer of sulfur containing products. The deal is expected to be finalized by the end of October. Financial details of the acquisition are not available.
According to its website, Ag Formulators is a privately-owned company with 100 employees located in the San Joaquin Valley. Its 20 acre plant site offers both formulation and warehousing onsite. Its storage space includes 100,000 square feet of flat storage and 2.5 million gallons of liquid storage, 750,000 gallons of which is stainless steel. The company is a toll manufacturer specializing in agricultural, home and garden, and industrial products.
TKI, based in Phoenix, produces and markets specialty chemical solutions, including fertilizers, soil fumigants and off-patent EPA-regulated chemicals and process chemicals and services to diverse markets in the United States, Mexico, Central and South America and selected countries throughout the world. TKI, a part of the Tessenderlo Group, Brussels, Belgium, has eight manufacturing plants in North America, in addition to an extensive terminal network.
ISX moves ahead with Saskatchewan potash exploration
ISX Resources Inc., Vancouver, said Oct. 12 that it has initiated a 25.6 km2, 3-dimensional seismic program within a 97,240-acre potash exploration permit known as Subsurface Mineral Permit KP 289. The seismic program is focused in the area of the abandoned Imperial Findlater potash solution mining pilot test site. Imperial Oil Ltd. (now ExxonMobil) explored the northwestern portion of the permit area in the 1960’s.
ISX said the historical data from this exploration program consists of drill cores, borehole geophysical well logs, chemical assay data from drill core analyses, seismic maps, and a brief seismic report. The Imperial Oil program was completed and abandoned in 1968. The Imperial Findlater site confirms the presence of potash mineralization, thus it was selected by ISX as a priority target for further potash resource definition.
ISX has engaged Boyd Petrosearch of Calgary to conduct and oversee all the aspects of this seismic survey. Data from the seismic survey will be used to further define the thickness, continuity, and variation of the Patience Lake and Belle Plaine potash-bearing beds. The company expects the program to be completed in first quarter 2008.
ISX controls a 97,240-acre Potash Exploration Permit, KP 289, in south-central Saskatchewan. The area is immediately adjoining the Belle Plaine potash solution mine operated by The Mosaic Co., which has been in continuous production since 1964 with a 2007 annual capacity of 2.8 million mt of KCl finished product. ISX believes that its own permit area shares the same general geological structure and bed characteristics as the Mosaic Belle Plaine operating potash solution mine.
The company recently completed a technical report on the permit area; a copy is filed on www.sedar.com. It said the authors estimated that the indicated and inferred mineral resources for the Patience Lake and Belle Plaine potential solution mining intervals are indicated mineral resource of 58 million mt of KCl, and inferred mineral resource of 570 million mt of KCl. When intervening potash beds are included, the indicated resource is increased to 65 million mt of KCl, and the inferred to 620 million mt KCl.
ISX is a Canadian-based potash company engaged in the identification, acquisition, exploration, and development of advanced resource properties. The primary interests of the company include an option to acquire 100 percent interest in the 97,240-acre Potash Subsurface Exploration permit (GM June 25, p. 12).
Senate Finance Committee approves ag security tax credit
The Senate Finance Committee on Oct. 4 approved the Heartland, Habitat, Harvest, and Horticulture Act of 2007, which includes the Agricultural Business Security Tax Credit Act. The security tax credit proposal, sponsored by Sen. Pat Roberts (R-Kan.) and supported by the fertilizer and agri-chemical industries, provides a tax credit for 30 percent of costs to implement security measures at agricultural facilities where pesticides and fertilizers are stored.
Agriculture retailers, distributors, manufacturers, formulators, and aerial applicators of agricultural pesticides or fertilizers are eligible for the credit, which is intended to help pay for security measures, including employee security training and background checks, installation of security equipment, and computer network safeguards. The proposal sets a $2 million annual limit and a per facility limitation of $100,000 (reduced by credits received for the five prior taxable years). The cost is $14 million over ten years.
“It is critical that we think outside the box to continue to fight and win the war on terrorism,” Sen. Roberts said. “It is also no secret that highly hazardous and volatile chemicals are used in agriculture and should be secured from terrorists. This tax credit will pass on savings to benefit not only the agribusiness, but the producer and eventually, the consumer.”
“With the issuance of new Department of Homeland Security regulations and the importance of securing agricultural fertilizers and pesticides storage facilities, this much-needed tax credit will assist our industry with implementation costs to improve security,” said Jack Eberspacher, president and CEO of the Agricultural Retailers Association. “ARA is working with a broad coalition, including the National Agricultural Aviation Association, CropLife America, Chemical Producers and Distributors, The Fertilizer Institute and state and regional associations, such as Montana, Kansas, Nebraska, Far West, Michigan, New York and Iowa, to secure passage by contacting key committee members from their respective states.”
The bill now goes to the full Senate for debate and a vote. If approved, it will likely be attached to the Senate’s version of the 2007 Farm bill once that is ready for consideration on the Senate floor. Industry trade groups say they will work to ensure it is included in the final conference agreement between the Senate and House.