All posts by webster@kennedyinfo.com

Ammonia

Ammonia, Asia Pacific, Black Sea, Eastern Cornbelt, Great Lakes, Market Watch, Middle East, Northern Plains, Tampa, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa: Nothing new on prices was reported last week, except that supplies appear tight. This may translate into higher numbers in the next round of trading at Tampa or NOLA.

Eastern Cornbelt: Ammonia pricing had firmed to $770/st FOB in the Illinois market. Spring prepay was reportedly being offered at $800-$810/st FOB at some locations.

More record-breaking heat blanketed parts of the Eastern Cornbelt during the first days of August. Triple-digit highs were reported in central Indiana on Aug. 2, following a sweltering July that registered as the hottest month on record for Indianapolis.

Crop conditions improved slightly in Indiana due to spotty rains in late July, but Illinois was in worse shape last week. As of July 29, 5-9 percent of the corn in Illinois and Indiana was rated as good or excellent, compared with 16 percent in Ohio. Poor or very poor ratings were assigned to 71 percent of Illinois’ corn crop last week, compared with 69 percent in Indiana and 50 percent in Ohio. Nationally, USDA placed just 24 percent of the corn crop in the good or excellent categories last week, with 48 percent rated as poor or very poor.

As for soybeans, just 9 percent of the Illinois crop was rated as good or excellent last week, compared with 16 percent in Indiana and 22 percent in Ohio. Poor or very poor ratings were assigned to 54-56 percent of the soybeans in Illinois and Indiana last week, compared with 37 percent in Ohio. Nationally, 29 percent of the soybean crop was rated as good or excellent last week, with 37 percent classified as poor or very poor.

Western Cornbelt: Sources pegged the anhydrous ammonia market in a broad range at $700-$750/st FOB in the region, with the low reported in the Nebraska market for prompt tons. Sources quoted prepay offers at the $750/st FOB mark, although there were reports of postings as high as $770/st FOB on a spot basis in the region.

The Western Cornbelt saw another drop in crop quality and an increase in drought area as August began. Nearly all of Missouri was experiencing extreme drought conditions in late July, with exceptional drought – the most severe of drought ratings – reported in the southeastern and southwestern corners of the state.

Most of Nebraska had transitioned to extreme drought as well, with severe drought reported in the southeastern corner and a pocket of exceptional drought reported squarely in the center of the state. As for Iowa, most of the state remained in severe drought last week, with extreme drought conditions reported in east-central and southeastern areas of the state.

As of July 29, just 5 percent of Missouri’s corn crop was rated as good or excellent, compared with 20 percent in Iowa and 35 percent in Nebraska. Fully 83 percent of Missouri’s corn fell in the poor or very poor categories last week, along with 37 percent of the crop in Nebraska and 46 percent in Iowa.

Only 7 percent of Missouri’s soybeans fell in the good or excellent categories last week, while 72 percent was rated as poor or very poor. In Iowa and Nebraska, the soybean crop was rated at 24-25 percent good or excellent last week, with 34-38 percent in the poor or very poor categories.

Northern Plains: Minnesota sources tagged the ammonia market last week at $740-$760/st FOB, depending on location. Delivered ammonia in the North Dakota market covered a broad range, with sources quoting fall prepay tons from as low as $770-$777/st DEL from North Dakota shipping points to as high as $825/st DEL for tons from Canada.

Effective July 20, Agrium’s ammonia postings in the Leal/Beulah sales area in North Dakota firmed again, moving to $825/st FOB and $845/st DEL. Those levels were up $45/st from Agrium’s July 13 list prices in that locat

Loveland inks deal with AMS, buys stake

News, News Briefs, Western

Loveland, Colo. — Loveland Products Inc., a leading provider of high performance crop input products, and Advanced Microbial Solutions LLC (AMS), Pilot Point, Texas, an agricultural technology company delivering biochemical solutions for efficient and sustainable plant nutrition, said Aug. 1 that the two have signed a strategic partnership agreement giving Loveland exclusive, worldwide distribution rights to existing AMS technology, as well as access to an integrated pipeline of new product and technology opportunities. As part of the agreement, Loveland has acquired an ownership position in AMS, producer of two of Loveland’s fastest growing plant nutrition brands, Accomplish LM® and Titan®. Loveland is a subsidiary of Crop Production Services Inc., and part of Agrium Inc. AMS will continue to operate as an emerging technology company, separate from but strategically aligned with Loveland. AMS products are biochemical fertilizer catalysts derived from a naturally occurring community of beneficial microorganisms and their byproducts that work in the soil system to enhance the performance of fertilizers. In addition to distribution under Loveland’s Accomplish and Titan product lines, the companies will also continue to market the SoilBuilder® and Nutrilife™ brands into the agricultural and professional turf markets, respectively. AMS recently added a new, state-of-the-art manufacturing facility in Denton, Texas, that has significantly increased production volume and efficiency. In addition to the rapid growth Loveland is experiencing with the AMS technology in the U.S., the companies are also exploring several opportunities for expansion in key international regions.

Would-be producer gives up on Iowa

California, News, News Briefs

San Francisco — While Iowa appears to be pulling out all the stops to lure the $1.5 billion nitrogen plant by Orascom Construction Industries (OCI), a much smaller nitrogen start-up, SynGest Inc., feels spurned by the state and vows to look elsewhere for a plant site. “The state made a rash decision to withdraw funding without ever having a conversation with anyone at our company,” SynGest CEO Jack Oswald told Green Markets. “We have moved on. When a state chooses to withdraw financial support for no good reason, as Iowa has done, and the way it has done it, it makes it unsafe for a business to continue operating in that state. If and when the current administration changes, we may re-consider.” Oswald is now looking at other states and hopes to have an announcement soon. Earlier this year, the Iowa Economic Development Authority (IEDA) cancelled a $2.5 million grant for the firm’s plant to produce energy and fertilizer from corn cobs (GM May 21, p. 15). IEDA said SynGest had defaulted on its state contract by failing to note in its application for the grant that SynGest Chairman Serge Randhava had been accused in a federal lawsuit in Illinois of racketeering and fraud related to his role in a previous research project involving fertilizer. SynGest says that its proposed $102 million initial plant, which would be built in Menlo, Iowa, would use 150,000 st/y of locally supplied corn cobs to manufacture 50,000 st/y of ammonia, enough to fertilize 500,000 acres of nearby Iowa farmland under corn. Oswald has said Iowa could accommodate 20 such ammonia plants. In the meantime, SynGest reports that it has lined up Matheson Gas, a unit of Japan’s Taiyo Nippon Sanso Corp., to supply 100 percent of the oxygen and nitrogen for SynGest’s worldwide ammonia and urea projects.

CVR 2Q income off slightly; touts forward orders

News, News Briefs, Southeast, UAN

Sugar Land, Texas — CVR Partners LP, which owns a nitrogen plant in Coffeyville, Kan., reported net income of $35.1 million ($0.48 per diluted common unit) on sales of $81.4 million for the second quarter ending June 30, 2012, compared to the year-ago $38.2 million ($0.42 per unit) on sales of $80.7 million. Adjusted EBITDA was $44.1 million, down from $45 million. “Solid execution throughout the organization resulted in another strong quarter for the partnership,” said Byron Kelley, CVR president and CEO. “In addition, we leveraged a continued environment of robust fertilizer pricing during the second quarter and secured orders for substantially all of our targeted production for the third quarter and a significant majority of the fourth quarter. We also began placing orders for a number of early 2013 deliveries.” The company has announced a second-quarter distribution of $0.60 per unit and has reaffirmed calendar year guidance of $1.65-$1.85 per unit, which takes into account a biennial turnaround in the fourth quarter. Kelley said CVR has made important progress on its UAN expansion and expects to have a full year of increased UAN production in 2013. Second-quarter UAN sales were up at 177,200 st with an averaged plant gate price of $329/st, compared to the year-ago 166,100 st ($300/st). Ammonia sales were 29,400 st ($568/st) versus 33,600 st ($574/st). Six-month income was up 18.9 percent, to $65.3 million ($0.89 per unit) on sales of $159.7 million from the year-ago $54.9 million ($0.42 per unit) on sales of $138.1 million. Adjusted EBITDA was $82.1 million, up from $70.9 million. Six-month UAN sales were down at 335,500 st ($322/st) versus the year-ago 345,400 st ($252/st), while ammonia was 59,300 st ($591/st) versus 60,900 st ($570/st).

Martin sulfur/fert unit beats expectations

News, News Briefs, Southeast

Kilgore, Texas — Martin Midstream Partners LP said the performance of its Sulfur Services fertilizer division continued to exceed expectations during the second quarter ending June 30, 2012. The unit reported operating income of $12.3 million on revenues of $67.1 million, up from the year-ago $10.1 million on revenues of $76.9 million. Fertilizer volumes were up at 83,600 lt from 69,400 lt, while sulfur was down slightly to 328,000 lt from 339,600 lt. Six-month unit income was $24.8 million on revenues of $141.6 million, up from the year-ago $18.1 million on revenues of $136.7 million. Fertilizer volumes were up at 177,500 lt from 147,000 lt, while sulfur was down at 636,200 lt from 688,500 lt. Company-wide, net income was down at $7.2 million ($0.25 per limited partnership unit) on revenues of $292.9 million from the year-ago $8.8 million ($0.37 per unit) on revenues of $260 million. Six-month income was $17.7 million ($0.64 per unit) on revenues of $602.3 million, versus the year-ago $16.1 million ($0.67 per unit) on revenues of $513 million. On Aug. 1, Martin announced the completion of the sale of its East Texas and Northwest Louisiana gas gathering and processing assets for net cash proceeds of $273.3 million.

Fertilizer sales up, earnings down at Compass

Midwest, News, News Briefs

Overland Park, Kan. — While second-quarter specialty fertilizer sales were up 14 percent for Compass Minerals, to $56.2 million from the year-ago $49.5 million, operating earnings were off 26 percent, at $13.9 million from $18.7 million. Compass said production costs were up due to cool and rainy weather in 2011 at the Great Salt Lake solar evaporation ponds, which caused the company to have to buy potash to supplement its SOP production. As a result, cost per ton was up, at $398/st versus the year-ago $298/st. The company sold 91,000 st during the quarter at an average price of $612/st, up from the year-ago 83,000 st and $600/st, respectively. Compass says its SOP markets and prices remain stable, and that weather at the Great Salt Lake is almost ideal this year. It continues to project 2012 sales of 375,000 st. It expects to sell through its high-cost inventories in early 2013. Going forward, the company is looking at shifting some of its low-end Big Quill production to Great Salt Lake, and allocating more high-end production to Big Quill. Six-month fertilizer earnings were $34.6 million on sales of $114.7 million, compared to the year-ago $38 million on sales of $104.9 million. Volumes were 187,000 st ($612/st), versus the year-ago 178,000 st ($591/st). Compass-wide, net earnings were off 32 percent, to $9.5 million ($0.28 per diluted share) on sales of $178.5 million from the year-ago $14 million ($0.42 per share) on sales of $179.9 million. Sales in the company’s salt segment were off 6 percent, and the company expects an overhang in that market due to inventories that built up during the warm winter. As a result, third-quarter sales are forecast at only 1 million st, versus the year-ago record sales of 1.9 million st. Company-wide, six-month earnings were $49.4 million ($1.47 per share) on sales of $493.8 million, versus the year-ago $70.5 million ($2.11 per share) and sales of $570.5 million.

Magellan NH3 margins more than double

Ammonia, Midwest, News, News Briefs

Tulsa — Magellan Midstream Partners LP reported operating margins of $4.48 million on revenues of $6.66 million for the second quarter ending June 30, 2012, compared to the year-ago $2.03 million on revenues of $5.75 million. The company cited a slight uptick in volumes at 93,000 st, up from 91,000 st, as well as higher tariffs, up an average 11 percent, and reduced costs due to the completion of hydro testing on its anhydrous ammonia pipeline system. Six-month margins were $8.38 million on revenues of $13.0 million, up from the year-ago $5.73 million on revenues of $12.8 million. Volumes were off at 382,000 st from 412,000 st. Company-wide, Magellan reported record net income of $137.8 million ($1.22 per diluted share) on revenues of $449.5 million for the second quarter, compared to the year-ago $103 million ($0.91 per share) on revenues of $383.3 million. The company has announced that it significantly increased the partnership’s quarterly cash distribution to 94.25 cents per unit for the period April 1-June 30, 2012, representing the 41st distribution increase since its initial public offering in 2001. The second-quarter 2012 distribution is 20 percent higher than the second-quarter 2011 distribution of 78.5 cents per unit, and represents a 12 percent increase over the first-quarter 2012 distribution of 84 cents. Six-month net income was $231.3 million ($2.04 per share) on revenues of $943 million, up from $193.1 million ($1.71 per share) and $826.2 million.

Land OÆLakes 2Q earnings off 30 percent

Great Lakes, News, News Briefs

Arden Hills, Minn. — Land O’Lakes Inc.’s net earnings were off 30 percent for the second quarter ending June 30, 2012, though sales edged up. Second-quarter earnings were $47.2 million on sales of $3.6 billion, down from the year-ago $67.6 million on sales of $3.47 billion. Lower quarterly and first-half earnings were attributable to the overall economic environment, declining markets, and excess milk supplies, which impacted the Dairy Foods business. These factors were partially offset by exceptionally strong earnings in the Crop Inputs business, with the segment’s WinField Solutions benefiting from the early spring and favorable early growing conditions. "Earnings across business units are mixed as we face continuing challenges from the struggling national economy and volatile markets," said President and CEO Chris Policinski. "We are addressing these challenges by focusing on growing revenues, reducing costs, improving efficiencies, and streamlining processes as part of our company-wide initiative called Total Margin Management." Six-month earnings were $132 million on sales of $7.46 billion, down from the year-ago $168.8 million on sales of $6.93 billion. In core businesses, first-half sales were up 15 percent in Crop Inputs, 11 percent in Feed, and 17 percent in Layers, while Dairy Foods sales were down 7 percent, primarily because of market conditions. LOL said it is committed to balancing the near-term investment requirements of growth with the long-term objective of maintaining a strong balance sheet. Total debt as of June 30, 2012, was $1.38 billion, up $0.32 billion from the same date one year ago. It said the increase was due to several acquisitions that are now generating additional cash flow, as well as higher working capital needs related to growth and increased commodity prices.

Intrepid reports second quarter results

News, News Briefs, Western

Denver — Intrepid Potash Inc. reported net income of $19 million and earnings per diluted share of $0.25 for the second quarter ending June 30, 2012, compared with $30.7 million and $0.41, respectively, in the second quarter of 2011. For the first six months, net income was $39.6 million, compared with $58.9 million during last year’s first half. Adjusted EBITDA for the second quarter was $42.9 million, compared with $59.8 million in 2011. Sales of both potash and langbeinite, which the company markets as Trio®, were down for the quarter, and production of both products was down from the year-ago quarter as well. Potash sales were 184,000 tons and production was 170,000 tons for the second quarter, compared with 225,000 tons and 209,000 tons, respectively, in last year’s second quarter. The average net realized sales price for potash, which the company calculates as gross sales less freight costs, divided by the number of tons sold in the period, was $465/ton in the quarter, compared with $462/ton in the second quarter of 2011. “During the quarter, as expected, we saw lower potash demand from our customers compared with the first quarter of 2012,” Intrepid said. “We believe dealers sold product from their storage capacity and drew down their own inventory levels to meet farmer demand with a goal of ending the spring with empty potash bins.” Second-quarter sales of Trio® were 26,000 tons and production was 33,000 tons, compared with 39,000 tons and 44,000 tons, respectively, in the same period a year ago. The average net realized sales price for Trio® was $322/st in the second quarter, compared with $222/st in the second quarter of 2011. Intrepid said capital investments in the second quarter totaled $62.2 million, reflecting increased construction activity for its HB Solar Solution mine and North compaction project, both in Carlsbad, N.M. It said it is on track to invest approximately $225-$300 million in capital projects for the full year 2012. Looking ahead, Intrepid noted the increased severity of drought in the Midwest. “We believe the trend of stronger commodity prices into the fall provides a constructive scenario for farmer economics to remain solid heading into the fall application season,” Intrepid said. “The drought conditions have the potential to pressure stocks-to-use ratios, therefore providing a solid backdrop for farmer economics into 2013 and reinforcing our expectation that farmers will apply near normal volumes of potash during the fall application season.” Intrepid expects potash sales of 220,000-250,000 tons for the third quarter and 820,000-870,000 tons for the full year of 2012, with production estimates at 180,000-200,000 tons for the third quarter and 785,000-825,000 for the year. As for Trio®, Intrepid estimates production of 35,000-45,000 tons and sales of 30,000-40,000 tons for the third quarter, with full-year production and sales projected at 130,000-165,000 tons.