All posts by webster@kennedyinfo.com

CHS acquires Brazilian company

Breaking Industry News

CHS Inc. today announced it has acquired Atman, a company based in Goiania, Brazil. The acquisition was executed through the company’s CHS do Brasil entity in that country.

Atman is an input distribution and grain origination company operating in Goias, the third largest producing state of Brazil.

"CHS is steadily and strategically expanding its South American grain and crop nutrients business. As part of CHS, Atman will accelerate our growth," said Stefano Rettore, senior vice president, CHS South America, Sao Paulo, Brazil. "This acquisition will help us further fulfill the CHS aspiration for global commodities expansion by providing expertise in barter operations that are key to the business model in the Brazilian cerrado."

The Atman acquisition rounds out a series of strategic South American business investments CHS has announced in the last six months. In May, CHS announced it had purchased 25 percent ownership of TCN, a Brazilian logistics company and also signed a long-term agreement with TCN, securing export terminal access at the Port of Itaqui, Sao Luis, Brazil. In July, CHS acquired 50 percent ownership of Andali, a provider of fertilizer storage and blending services based in Paranagua, Brazil.

"CHS is committed to the long-term growth and development of its commodities business in Brazil and across the region. These investments and the expertise that our partners and new employees bring will help us further add value to our owners," Rettore said.

CF to buy Viterra stake in CFL

Breaking Industry News

CF Industries Holdings Inc. said late Aug. 2 that it has entered into a definitive agreement with Glencore International plc to acquire the interests in Canadian Fertilizers Ltd. (CFL) currently owned by Viterra Inc. for total cash consideration of C$915 million, subject to certain adjustments. CFL owns the largest nitrogen fertilizer complex in Canada, located in Medicine Hat, Alberta. CF already owns the majority stake and this will give it 100 percent.

Agrium Inc. was initially to buy the minority CFL interest as part of its deal to buy the bulk of Viterra’s retail assets from Glencore. Agrium reached an agreement for Glencore to make the sale to CF. Agrium said the new arrangement will significantly reduce its costs to buy the retail assets and it will also remove uncertainties, which include regulatory scrutiny. Canadian authorities are yet to approve the Agrium/Viterra purchase and some have complained about Agrium’s stance as both a major producer and major retailer.

Agrium 2Q income up 20 percent

Breaking Industry News

Agrium Inc. reported a 20 percent increase in net earnings for the second quarter ending June 30, 2012 to $860 million ($5.44 per diluted share) compared to the year-ago $718 million ($4.54 per share). It was a record second quarter for the company, which said all three of its business sectors capitalized on strong fundamentals. Overall, sales were up 10 percent to $6.83 billion from the year-ago $6.2 billion.

Sulfur

Market Watch, Sulfur, Tampa, U.S. Gulf

Tampa: The new molten sulfur price for the third quarter was settled the previous week at $170/lt, down $10/lt from the previous quarter’s $180/lt.

The U.S. Department of Energy (DOE) said the refinery operating capacity rate dropped 0.8 percent last week, from 93 percent to 92.2 percent.

The basis for determining capacity has been changed from the previous year, however. In 2011, the DOE was using a refining capacity of 17.736 million barrels, but adjusted capacity to 17.230 million barrels this year. That, and the greater use of lower sulfur oil for refining, may account for the high capacity operating rate, but little changed in the amount of sulfur produced.

U.S. Gulf: Prices were in the $180-$185/mt range for prill exports.

Benelux: The current price range was $212-$220/mt FOB.

Potash

Eastern Cornbelt, Great Lakes, Market Watch, Northeast, Northern Plains, Potash Muriate, U.S. Gulf, Western Cornbelt

U.S. Gulf: Sources were doubtful that the $450/st FOB low of last week could still be repeated, especially since the lower numbers were not quickly embraced by all sellers.

Price ideas for the next round of business were anywhere from $460-$485/st FOB. The latter would be more in line with the recent $20/st FOB increase in producer postings, but most indications are that those hikes have yet to stick at inland locations.

Eastern Cornbelt: The potash market remained at $500-$510/st FOB regional warehouses. Some regional suppliers had reposted at higher levels on the basis of higher producer postings, but no sales were confirmed to support those numbers.

Western Cornbelt: Potash was unchanged at $500-$510/st FOB regional warehouses, with several sources touting the low end of that range as “the common number out there.”

Northern Plains: Although higher potash postings took effect July 21 from some producers, regional sources last week continued to quote the granular potash market at $480-$490/st FOB Saskatchewan mines, depending on grade, and $500-$510/st FOB Minnesota warehouses.

Great Lakes: Although some producer postings had firmed to $530/st FOB, Great Lakes regional sources continued to quote the potash market at $510/st FOB on the low end.

Northeast: Potash pricing remained at $520-$530/st FOB and $530-$540/st rail-DEL in the Northeast. Potash postings from PCS Sales firmed $20/st on July 21 to $540/st FOB Baltimore, but sources said the new reference price was untested.

Phosphates

Central Florida, Di-Ammonium Phosphate, Eastern Cornbelt, Great Lakes, Market Watch, Mono-Ammonium Phosphate, Northeast, Northern Plains, U.S. Exports, U.S. Gulf, Western Cornbelt

Central Florida: Spot sales of prompt phosphate railcars from Florida were absent again last week, and that may continue for several more weeks. A few truck sales from traders who had long positions were selling below the previous week’s range by about $10/st FOB.

Prompt spot sales of railcars from Central Florida will probably not begin until September, and may be slow even then due to low inventories. Export was taking a huge chunk out of production.

The DAP price range for Central Florida widened slightly to accommodate truck sales by traders. The range moved from a flat $500/st FOB to $490-$500/st FOB. CF Industries’ posted price was at the $500/st FOB mark, and Mosaic was also at $500/st FOB.

MAP continued to sell at a $20/st premium to DAP in Central Florida. PCS Sales, which produces MAP at its White Springs facility in North Florida, was selling at prices comparable to the market.

U.S. Gulf: The Ohio Valley received some rain last week, but devastating drought conditions persisted in the Midwest in late July. According to the U.S. Drought Monitor on July 31, drought conditions ranging from moderate to exceptional extended from California west to the Eastern Cornbelt, and from the Dakotas south to Texas.

The other problem has been low water levels on the lower Mississippi River and other waterways in the region. As a result, many river facilities were unable to load or unload. The main channel was still running at least nine feet, but barge traffic was slow. Mosaic said it was not having any loading problems at its facility at Donaldsonville.

The low water level was also hitting the fertilizer industry. Some with positions faced a choice between paying for fleeting their phosphate barges or selling at a price lower than they would have received at their warehouses, and they were deciding to sell now. That was putting downward pressure on the market.

Late last week, the futures market showed price gains for corn, soybeans, and wheat. The corn price for December was slightly higher than a week earlier, moving to $7.9525/bushel from $7.8375/bushel a week earlier. The corn price for December 2013 was $6.3125/bushel, increasing from $6.23/bushel the previous reporting period.
For November 2012, soybeans rose to $16.975/bushel from $15.985/bushel the previous week, and beans for November 2013 increased to $12.695/bushel from $12.6625/bushel a week earlier. Wheat for July 2013 rose to $8.325/bushel from $8.1125/bushel the week before, and wheat for July 2014 was listed at $7.905/bushel last week, up from $7.4475/bushel the previous week.

Phosphate sales tend to be slow at this time of year normally, and the drought and water levels were not an inducement to buy last week. Only a few transactions were found. MAP was said to be in short supply last week, with the price running around $530-$535/st FOB.

The pricing range for prompt NOLA DAP barges was $500-$510/st FOB, which was down slightly at the top of the range from the previous week’s $500-$512/st FOB. Prices were weaker at the end of the week.

Eastern Cornbelt: Most sources quoted the DAP market at $545-$555/st FOB in the Eastern Cornbelt region, with MAP $20/st higher. The 10-34-0 market was pegged at the $525/st FOB level in the Indiana market last week.

Western Cornbelt: DAP remained at $545-$550/st FOB regional warehouses, with MAP quoted commonly at the $565/st FOB mark. 10-34-0 pricing continued to slide in the Western Cornbelt, with sources quoting the dealer market at $490-$525/st FOB in the region last week.

Agrium’s phosphoric acid postings for Aug. 1 included $950/st rail-DEL for both SPA and MGA in Iowa, Nebraska, Colorado, Kansas, New Mexico, Oklahoma, and Texas.

Northern Plains: DAP was quo

Ammonium Sulfate

Ammonium Sulfate, Eastern Cornbelt, Great Lakes, Market Watch, Northeast, Northern Plains, Western Cornbelt

Eastern Cornbelt: The long-awaited ammonium sulfate fill program from Honeywell was announced in late July, with limited fill tons of granular ammonium sulfate offered at $335/st FOB and $345/st rail-DEL in the Midwest. Fill pricing from DSM in the Midwest was tagged at $345/st rail-DEL as well, with the low end quoted at $327.75/st after discounts to large buyers.

Ammonium thiosulfate was tagged at $355/st FOB in Ohio on a spot basis.

Western Cornbelt: Granular ammonium sulfate fill was quoted at $335/st FOB and $345/st rail-DEL in the Western Cornbelt region for limited tons. Ammonium thiosulfate was steady at $360-$375/st FOB.

Effective Aug. 6, American Plant Food’s (APF) granular ammonium sulfate postings will firm $20/st from July 16 pricing levels, moving to $315/st FOB Freeport, Texas, $325/st FOB Galena Park, Texas, $340/st FOB Fort Worth, Texas, $345/st FOB Mermentau, La., and $350/st FOB Littlefield, Texas. Coarse grade postings will move to $300/st FOB Freeport, $310/st FOB Galena Park, $325/st FOB Fort Worth, and $335/st FOB Littlefield, while standard grade ammonium sulfate will also firm $20/st to $295/st FOB Freeport and $330/st FOB Littlefield. APF’s N-Pac Compacted posting will move on Aug. 6 to $330/st FOB Galena Park.

Northern Plains: The granular ammonium sulfate market was quoted at $335-$340/st FOB in Minnesota and $345/st DEL in the North Dakota market. Product was said to be in tight supply. Ammonium thiosulfate was tagged at $335/st DEL in North Dakota from Canada.

Agrium’s granular ammonium sulfate postings firmed on July 20 to $425/st rail-DEL in North Dakota, Minnesota, and Wisconsin, up $50/st from the July 6 reference price.

Great Lakes: Sources tagged the granular ammonium sulfate market at $335-$340/st FOB and $345/st rail-DEL in the Great Lakes region for allocated fill tons. The ammonium thiosulfate market was tagged at $355/st FOB Webberville, Mich.

Northeast: Granular ammonium sulfate fill tons were quoted at $328-$345/st DEL in the Northeast for limited tons, with the low reported to national accounts after discounts.

Nitrogen Solutions

Eastern Cornbelt, Great Lakes, Market Watch, Northeast, Northern Plains, U.S. Gulf, UAN, Western Cornbelt

U.S. Gulf: While NOLA barge price ideas generally continue to go up, sources last week were skeptical they would get there. Postings have reportedly worked their way up to as high as $340-$345/st ($10.63-$10.78/unit) FOB. Most said there has been a good bit of business in recent weeks, and that buyers stocked up before the new, higher postings. Still, the most recent barge business was put within the $320-$325/st ($10.00-$10.16/unit) FOB range last week.

Eastern Cornbelt: The UAN-28 market was quoted at $315/st ($11.25/unit) FOB in Indiana and $325/st ($11.61/unit) FOB in Ohio, with UAN-32 pegged in the $360-$370/st ($11.25-$11.56/unit) FOB range in the Illinois market.

Western Cornbelt: Iowa and Missouri sources tagged the common dealer price for UAN-32 at the $360/st ($11.25/unit) FOB mark last week. There were reports of one regional supplier offering limited forward pricing for spring 2013 in the $380-$385/st ($11.88-$12.03/unit) FOB range out of Midwest terminals.

Northern Plains: The UAN-28 market was quoted at $315-$325/st ($11.25-$11.61/unit) FOB in Minnesota, depending on location and time of delivery, and up to $345/st ($12.32/unit) DEL in North Dakota for prompt tons from Canadian shipping point.

Great Lakes: Wisconsin sources pegged the UAN-32 market at $370/st ($11.56/unit) FOB. Michigan sources quoted the UAN-28 market in a broad range at $315-$335/st ($11.25-$11.96/unit) FOB, depending on location and time of delivery.

Northeast: Sources pegged the UAN-30 market at $325-$330/st FOB ($10.83-$11.00/unit) FOB Baltimore, based on a UAN-32 vessel market pricing range of $350-$355/mt CFR for new business. Out of terminals in upstate New York, the UAN-32 market was quoted at the $376/st ($11.75/unit) FOB mark, while rail-delivered UAN-32 to the New England market was pegged in the $375-$380/st ($11.72-$11.88/unit) range.

Urea

Bangladesh, Black Sea, China, Eastern Cornbelt, Great Lakes, Indonesia, Market Watch, Middle East, Northeast, Northern Plains, Pakistan, U.S. Gulf, Urea, Western Cornbelt

U.S. Gulf: While some higher-priced barges were reported at NOLA early in the week, most said prices had sunk back to the $432-$435/st FOB range by week’s end. Upriver barges were reported to be garnering a significant premium.

Low water levels, especially on the lower Mississippi River, continue to be a major concern, as is a large influx of imports slated for August/September. There were unconfirmed reports that some vessels were being diverted away from NOLA.

Eastern Cornbelt: Granular urea pricing had reportedly slipped to $490-$500/st FOB in the Eastern Cornbelt region, with the low reported in the Illinois market.

Western Cornbelt: Granular urea continued to be quoted in the $495-$500/st range FOB most regional terminals in the Western Cornbelt, with minimal demand reported.

Northern Plains: Minnesota sources quoted the granular urea market at roughly $500/st FOB the Twin Cities, give or take. In the Dakotas, urea pricing for limited tons in late July ranged from $515-$526/st FOB, depending on location.

Agrium’s granular urea postings moved on July 20 to $550/st FOB Marion, S.D., and North Dakota warehouses at Alton, Carrington, Colfax, and Scranton; and $555/st DEL in Minnesota, Wisconsin, and the Dakotas. Those levels reflect a $25/st increase from Agrium’s July 13 urea postings in those locations.

Great Lakes: Granular urea pricing in the Great Lakes region ranged from $490-$505/st FOB, with the low quoted in southern Wisconsin and the upper end in the Michigan market. Michigan sources said prepay urea was being offered on a spot basis for about $15/st higher.

Northeast: The granular urea market was down from last report, with the dealer price pegged at a nominal $510/st FOB Philadelphia.

Rainfall in recent weeks has eased drought concerns in much of the Northeast, but patches of moderate to severe drought persisted in western New York and on Maryland’s eastern shore, according to the July 31 U.S. Drought Monitor.

Argentina: The Profertil complex is expected to be offline for one month due to gas curtailments.

Pakistan: The Trading Corporation of Pakistan (TCP) closed its last tender July 27. The company issued an award of 50,000 mt to Keytrade at $419.39/mt CFR. The price is $7/mt lower than what TCP paid to CHS in the previous tender.

All told, nine companies participated in the tender, with the highest offer at $447.39/mt CFR. Sources say the price reflects the sentiment that the urea market is going soft.

The tonnage awarded last week closes the importing authorized by the Pakistan government. After reviewing the output of the domestic urea producers earlier this year, the government instructed TCP to bring in 300,000 mt to ensure enough material was on hand for the upcoming application season.

Pakistani producers complained that the only reason there was a shortfall in urea production was because of a shortage of natural gas. The government diverted the gas from the industrial sector to domestic use. In the period leading up to the first couple of tenders, the producers argued that they could cover the 300,000 mt needed for less than the imports if they were only provided the natural gas they need.

Of the 250,000 mt already ordered, TCP reports that 110,000 mt has arrived in the country and is on its way to regional distributors.

Pakistani media report that in late June the Ministry of Petroleum reported five out of 10 urea plants were shut down because the suspension of natural gas forced the producers to close their plants.

The new estimated shortfall is being pegged at 443,000 mt by industry analysts. These