All posts by webster@kennedyinfo.com

Urea

U.S. Gulf: Granular urea prices were moving up last week, but there was a big disagreement over by how much.

Most players were putting new business within the $418-$443/st FOB range. However, there were outliers on both ends, with some saying lower and others much higher.

Sources said those seeing prices closer to $400/st were calculating new business out of Egypt that would not arrive for some time. In the meantime, there were reports by others that the high $400s/st to low $500s/st FOB had been achieved by one major player.

In the past two months there has been a large disconnect within the prompt range between ready-to-sail barges and those that might load within the next few weeks. This would continue to explain the higher number versus those still in the $400s/st FOB, whether for a few weeks out or for all of July.

In the meantime, prills continue to be thinly traded, with inland numbers suggesting a price of $500/st FOB.

Eastern Cornbelt: Nitrogen pricing was transitioning from prompt to summer fill pricing in the Eastern Cornbelt region, and sources reported a wide range of numbers as a result.

Sources quoted granular urea summer fill offers as low as $450-$470/st FOB in the Illinois market for July and August shipments, while one source said prompt pull was still tagged as high as $525-$545/st FOB. In Ohio, the urea market was quoted at $515/st FOB Toledo at midweek.

Western Cornbelt: Urea prices continued to fall, though sources said product was still being pulled for applications on rice in southern Missouri. Missouri sources tagged the prompt urea market at $525-$550/st FOB last week, depending on location. The Catoosa/Inola urea market in Oklahoma was quoted at the $530/st FOB level.

No summer fill prices were reported for urea in the region.

Northern Plains: The granular urea market was transitioning from prompt to summer fill pricing in the Northern Plains region, and the gap between the two was large.

Sources quoted the Twin Cities market for prompt pull at the $600/st FOB mark last week, down significantly from last report, while the summer fill price out of the Twin Cities market was quoted as low as $445/st FOB for July and August. No current delivered prices were confirmed in the North Dakota market last week.

Great Lakes: With no demand for prompt urea reported in the region, sources quoted only summer fill offers last week, and these pricing levels were down dramatically from spring. In Michigan, sources said fill tons could be pulled for as low as $515/st FOB northern Ohio shipping points. In the Wisconsin market, urea fill for July and August was quoted in the $450-$470/st FOB range.

Northeast: The urea market continued to drop in the Northeast. “Tomorrow the price will be different than today,” said one contact. Sources pegged the Fairless, Penn., urea market in the $585-$595/st FOB range at midweek.

High heat and humidity settled over much of the Northeast and mid-Atlantic region last week, sending temperatures into the 90s in many areas, and heat index readings into the triple digits. Eight states were under heat advisories or excessive heat warnings at midweek.

Indonesia: Pusri scrapped the tender it had scheduled for June 15. Sources say the reference price floor was $470/mt FOB, and no one was interested at that level.
For traders, the scrapping of the tender was just one more indicator that the urea market was soft and getting softer.

Sources reported that Pusri was looking to do a few private deals to move some of the tons quickly. In the end, it looks as if none of those talks worked out.

Pusri will close another tender June 22 with three lo

Ammonia

U.S. Gulf/Tampa: The industry continues to wait for a final conclusion of Tampa prices for July. Most expect prices to be up, though not necessarily as high as recent spot business of $710/mt.

In the meantime, another barge transaction was reported for NOLA, this time at $655/st FOB.

Correction: The Tampa price for the issue dated June 18 should have read $625-$710/mt.

Eastern Cornbelt: The anhydrous ammonia market was quoted at $700-$730/st FOB regional terminals, depending on location and time of delivery.

Another week of high heat and humidity, coupled with limited rainfall, continued to expand drought conditions in the Eastern Cornbelt. Crop quality was deteriorating rapidly in the region as a result.

Western Cornbelt: The anhydrous ammonia market was flat at $625-$660/st FOB regional terminals, with the low in Nebraska.

Heat, humidity, and expanding drought continued to take a toll on corn, soybeans, and cotton in the Western Cornbelt last week.

Northern Plains: The anhydrous ammonia market in the region was quoted at $660-$700/st FOB for both prompt or summer fill tons, depending on location and supplier. Delivered ammonia in North Dakota was down from last report at $710-$720/st.

Powerful storms brought heavy rains and strong winds to parts of Minnesota and South Dakota early in the week. As of June 17, crop conditions in the region were still described in very favorable terms. “Most areas are in very good shape,” said one North Dakota source last week.

Great Lakes: Great Lakes regional sources quoted the anhydrous ammonia market at $700-$745/st FOB for fill tons, with the low reported in Wisconsin and the upper end in the Michigan market. No prompt demand was reported for anhydrous in the region last week.

Heavy rains and powerful thunderstorms hit northern and west-central Wisconsin at midweek, while high heat and humidity blanketed southern Wisconsin and much of Michigan. Sources reported dry crops in southern Wisconsin. “Spring and early summer demand is over,” said one source in that location. Another Wisconsin source reported that crop conditions in his trade area would deteriorate quickly if rain didn’t come soon. It has been “very dry, with way too much wind and high temperatures,” he said.

Middle East: Mitsui bought 15,000 mt from Sabic at a reported $644/mt FOB. This amount pushes up the public price by almost $25/mt FOB.

Sources say Mitsui needed the tons to make good on its commitments to a major buyer. Speculation is that the tons will be going to the East Coast of India. Traders dismissed the idea that the ammonia would be going to Southeast Asia.

Even though the sale to an Indian buyer may force a loss on Mitsui, going to East Asia would be an even bigger loss.

The cargo is set for delivery the end of this month. The promptness of the deal points to Mitsui moving quickly to cover contracted tons, said one trader.
For Sabic, the deal came at the right time.

The Arab producers have been saying for some time that the ammonia price was higher than the public posted price. This deal not only moves the price up, it puts it beyond where producers were talking just a week ago.

The higher price will help move the price Indian buyers pay under their formula-based contracts.

Even as the Arab Gulf is looking up, sources report the latest bit of business from Egypt looks like a softening market.

Reportedly, the last done deal out of Egypt was at $560/mt FOB. That price is significantly lower than the Yuzhnyy price, which many use as a measure of the Egyptian price.

Black Sea: “Muddled” an

Agrium details road to Retail $1.1 B EBITDA; Arkansas, Brazil acquisitions stand out YTD

Agrium Inc. recently detailed for analysts its road to achieving $1.1 billion in Retail EBITDA in 2015. Retail EBITDA for 2011 was $769 million, already on a steep upward trajectory from 2010’s $524 million.

Much of the growth – 42 percent – will be organic, with some 27 percent coming from growth in the company’s seed business. Another 26 percent will come from the acquisition of Viterra Inc.’s retail outlets in Canada. Agrium will be taking 232 Viterra outlets, adding to its own, which it said was just over 60. Beyond Viterra, Agrium is anticipating another 19 percent coming from smaller “tuck-in” acquisitions, with 16 percent coming from deals in North and South America, and another 3 percent from Australia. Some 13 percent of EBITDA improvement will come from improvements in the Australian retail business.

The largest “tuck-in” so far this year occurred in late February, when Agrium’s Crop Production Services (CPS) unit acquired Ritter Crop Services, a retail leader in northeast Arkansas. The deal included seven retail locations, including Caraway, Diaz, Lake City, Marked Tree, McCrory, West Ridge, and Wheatley. Agrium said the move enhances CPS’ position in its Mid-South region, part of the company goal of being the leading agricultural input leader in each of its markets. Agrium told analysts it was able to quickly close on this deal, and as a result was able to catch spring revenues.

So far this year, Agrium says it has completed nine deals – six in the U.S. and three in Australia – adding a total of 19 retail outlets and revenues of $132 million. Projected first-year EBITDA is $9 million. In addition to the Arkansas outlets, others added in the U.S. were in Montana, East Texas, Georgia, Indiana, and Massachusetts.

Since 2007, Agrium has added some 242 retail outlets via its smaller “tuck-in” acquisitions, which accounts for $1.22 billion in sales and EBITDA of $95 million.

In March, Agrium acquired its first major retail location in Brazil – Utilfertil, in Italpetininga, in the state of Sao Paulo. As its first in the country, Agrium said it did not fit within its “tuck-in” category. It includes 40,000 mt of storage capacity and four blenders with 1,500 mt capacity per day. It also has existing import and export licenses. The location will start out as a fertilizer retail site, but the company will be layering in crop protection, seed, and application activities over the next five years. Agrium touted the location and its logistics, saying it is near 20 percent of the farmland in Brazil, which represents 27 percent of the fertilizer usage in that region. Major crops include sugar cane, corn, coffee, and soybeans.

Agrium says it is one of the world’s largest global input retailers, and the largest in North America and Australia. It said with the Viterra acquisition it will be number one in Canada. In South America, it says it is number one or two.

The North American business is responsible for some 7 million mt of fertilizer, only 1.2 million mt of which is acquired from Agrium. Some 1 million mt is sold in South American retail, and 500,000 mt in Australia.

Agrium Retail President Richard Gearheard told analysts the company likes South America. It currently has retail locations in Argentina, Brazil, Chile, and Uruguay. The current focus, however, is outside of Argentina, which he said has 30 percent inflation and has been undergoing anti-free trade moves by the government. In addition, both corn and soybean yields were off last year due to drought.

Meanwhile, in the U.S., Gearheard told analysts that USDA’s projection of 166 bushels per acre for corn is on the upside. He cited drought conditions in West Texas and the Cornbelt, and noted that the extra corn acres added this year will be on lower y

Senate passes new Farm Bill; focus now shifts to House for timely passage

The U.S. Senate on June 21 passed its version of the new Farm Bill by a vote of 64-35. The Agriculture Reform, Food, and Jobs Act of 2012 (S. 3240) remains largely unchanged from the version the Senate Agriculture Committee passed earlier this spring, according to The Fertilizer Institute (TFI).

The bill features an expanded crop insurance program, which replaces direct payments to farmers with policies sold and serviced by private insurance companies, but heavily subsidized by the federal government. TFI said the “no” votes in the Senate chamber came from fiscal conservatives, joined by senators from the southeastern U.S. who were unhappy with the bill’s treatment of rice and peanut farmers.

Some 73 amendments to the bill were considered during floor debate, out of a total of 304 amendments offered. One week earlier, Majority Leader Harry Reid (D-Nev.) invoked procedures to limit the number of amendments after negotiations stalled over which to include. Among those amendments tabled was one that would have eliminated the Supplemental Nutrition Assistance Program, also known as food stamps, and replace it with block grants to states to operate their own programs. Another tabled amendment would have repealed the federal price-support program for sugar producers.

TFI was watching several amendments closely, and reported last week that “the most controversial amendments were not considered” when the bill came to a vote. One that was supported by TFI but not included in the final bill was an amendment offered by Sen. John Barrasso (R-Wyo.) that would have prevented EPA and the U.S. Army Corps of Engineers from using a pending guidance document to expand federal jurisdiction under the Clean Water Act.

Another amendment supported by TFI but not included in the bill was one offered by Sen. Mike Johanns (R-Neb.) that would have prevented EPA from regulating agricultural dust. TFI said a third amendment that would have curbed the use of ethanol required under the Renewable Fuel Standard was also not considered.

An amendment offered by Sen. Saxby Chambliss (R-Ga.) that would compel farmers to be in compliance with certain conservation requirements in order to be eligible to receive crop insurance premium subsidies was ultimately passed, but on a fairly close vote.

In a June 13 memo to members, TFI said it was following the Chambliss amendment. “Upon closer inspection,” TFI reported on June 21, “it’s not clear how much of an impact this will actually have since these are the same conservation requirements that were already mandatory for participation in the preexisting crop subsidy program.” TFI noted as well that the House Agriculture Committee is not likely to include the Chambliss provision, though that amendment will likely be revisited on the House floor and possibly when the House bill is conference with the Senate version.

The Environmental Defense Fund (EDF) reported in a June 21 statement that the Senate bill cuts some $23 billion from the Farm Bill budget over the next 10 years in an effort to reduce the federal deficit, including eliminating $6.4 billion from conservation programs. EDF expressed concerns about the conservation cuts, but hailed the Senate’s efforts to consolidate conservation programs and utilize local and state governments as conservation partners, while also requiring farmers on environmentally sensitive lands to meet conservation requirements in order to receive the taxpayer-funded crop insurance premium subsidies.

“While these cuts will hurt conservation efforts on the ground, senators made an effort to mitigate the impact of the loss in conservation funding by including policies that will make conservation programs more effective,” EDF said. “Congress must maintain and strengthen its commitment to conservation in this Farm Bill, and one

K+S breaks ground for Saskatchewan potash mine

K+S Potash Canada, a unit of Germany’s K+S Ag Group, broke ground June 19 on its new Legacy potash mine in southern Saskatchewan. K+S Chairman of the Board of Executive Directors Norbert Steiner and Saskatchewan Minister of Resources Tim McMillan both gave the start signal for the construction work to begin.

“The Legacy Project is of the utmost importance to us,” said Steiner. “We are convinced that Legacy is a decisive strategic step forward for the whole K+S Group and, in combination with our German potash mines, will significantly strengthen the international competitiveness of K+S.”

“This is certainly a great day for the people of Saskatchewan,” said McMillan. “For the first time in 40 years, a brand new potash mine will be built in our province. The jobs and economic development from this project will help us to continue to grow our economy, and keep the Saskatchewan Advantage.”

K+S says the preparatory work for establishing the infrastructure and the first stage in extraction operations, which have already been underway since 2011, are almost completed. K+S says it will spend C$3.25 billion in the first two phases of the new mine, which will use solutions technology. The company says the first volumes should be available at the end of 2015, and that the 2 million mt mark will be achieved in 2017. This will be followed by the gradual expansion of production capacity to 2.86 million mt/y by 2023. In the third expansion phase, a total output of a maximum of 4 million mt/y would then be possible about ten years later.

K+S hopes to utilize the extra production to give it more access to the international markets. Whether the company will ever be able to participate in Canpotex, the Canadian potash export organization, is a big question mark, as participation by K+S could run afoul of German antitrust regulations.

K+S initiated a “friendly takeover” of junior company Potash One in late 2010 in order to gain access to the Canadian reserves (GM Nov. 29, 2010).

In the meantime, BHP Billiton, after spending several million on its own planned greenfield potash mine for Saskatchewan – Jansen – has still not pulled the final trigger on whether to proceed with that project. A board of directors decision is expected later this year. Earlier this year, speculation had been that BHP might not proceed with Jansen due to company indications that it might cut back on some of its capital expenditures. At the time, BHP was quick to deny any plans were afoot to scuttle Jansen. Last week, there was speculation that BHP might be pulling out of potash exploratory work in Ethiopia.

Martin Midstream Partners LP (MMLP) – Management Brief

Martin Midstream Partners LP (MMLP), Kilgore, Texas, has promoted Jeff Posey to the position of general manager, fertilizer, effective June 1. In his new role, he will be responsible for planning and developing the sales and marketing of Disper-Sul plant nutrient sulfur, ammonium sulfate, ammonium thiosulfate, CSC ground sulfur products, AS-7 emulsified sulfur, and other sulfur-based fertilizer and industrial products manufactured by Martin’s Fertilizer division.

“We are very pleased to have Jeff joining our management team here in Kilgore and look forward to the expertise he brings to MMLP as we prepare for additional growth within the Fertilizer division of the Sulfur Services Segment,” said Ron Garner, MMLP vice president, fertilizer. Posey will be relocating to the corporate office in Kilgore.

Reporting to Posey will be Scott Erwine (Northern Region sales manager), Hugh Harbour (Western Region sales manager), Arlie Henry (Industrial Products sales manager), and Bob Bostick (Texas sales representative).

The International Plant Nutrition Institute (IPNI) – Management Brief

The International Plant Nutrition Institute (IPNI), Norcross, Ga., has announced its line-up of officers elected in May. Steve Wilson, chairman and CEO of CF Industries Holdings Inc., is the new chairman of the board for a two-year term. Dr. Mhamed Ibnabdeljalil, executive vice president of sales, marketing, and raw material procurement at OCP Group in Morocco, was elected vice chairman. Jim Prokopanko, president and CEO of The Mosaic Co., was elected chair of the finance committee.

Joachim Felker, member of the board of executive directors, K+S Aktiengesellschaft, Kassel, Germany, concluded his term as IPNI chairman and was recognized for outstanding leadership and service in that role since 2011.

Dr. Terry L. Roberts continues as IPNI president.

Mosaic gets approval on mine extension

Bradenton — The Manatee County Commission voted to approve a 646-acre expansion of Mosaic’s Wingate Creek Mine by a close 4-3 vote on June 19, according to local news reports. The project will destroy 49 acres of wetlands, and a motion to have the company post a bond of $103,000 pending reclamation of the wetlands failed by the same margin, 4-3. Environmental groups had opposed the plan, but the county commission’s staff had recommended approval. During the long approval process, the company agreed to change from a dragline operation to dredge. Mosaic had warned the county in a previous case that if it did not receive approval of the operating permit, it would file suit. Initial work on the site will begin in January 2013, with actual mining starting a few months later.

OCI gives update on new nitrogen plants

Cairo — Orascom Construction Industries told analysts June 11 that its new Algerian complex, Sorfert Algeria, successfully started production runs for Line 1 urea and ammonia in May. The first commercial shipment is slated for some time this month. Line 2 starts production later this year, with ammonia production expected in the fourth quarter. Sorfert adds 1.2 million mt/y of urea and 800,000 mt/y to OCI’s portfolio. In the meantime, OCI reported that its Beaumont, Texas, plant sold 38,000 mt of ammonia in the first quarter, and that going forward the plant is on track to produce 250,000 mt/y and 750,000 mt/y of methanol. OCI is still to pull the trigger on a large nitrogen plant for the U.S. heartland, where both Iowa and Illinois are vying for the plant. It is hoping for a decision by September. The company will use some of the funds from its recent sale in its stake in Gavilon Group LLC to pay for the new U.S. plant. In Brazil, where OCI hopes to partner in a new nitrogen plant, it said it is making very slow progress. It is hoping to find a location for that plant in the second half of 2012.

Ex-Scotts executive joins SafeLawns

Marysville, Ohio — Former Scotts Miracle Gro Vice President Mark Long has joined SafeLawns Foundation founder Paul Tukey to launch Organic Green Pros, a nationwide consulting service aimed at helping municipalities, businesses, homeowners, and the horticulture industry transition away from weed’n feed and other synthetic chemical lawn and garden products. “Historically, our industry has not always had the best reputation for environmental stewardship, and perhaps deservedly so,” declared Long, who was recruited to launch Scotts LawnService nationally in 1997. “Today the nation is demanding a different kind of approach that considers our impact on the environment, human health, and the planet overall. I’m excited to work with the leader in that conversation to effect real change.” For Tukey, author of the Organic Lawn Care Manual and referred to as “the godfather of the organic lawn movement” by the New York Times and others, working with the founder of the nation’s second largest synthetic chemical lawn care service company represents a huge opportunity, not a change of heart. “Mark’s 30-year operational track record in lawn care is unsurpassed,” said Tukey. “You won’t find anyone more respected, with more sincerity. Together we’ll show cities how to green their parks and playgrounds safely and affordably. We’ll show lawn care companies how to satisfy customer needs while striving for SafeLawns standards and maintaining profitability.” Long and Tukey plan to assist their clients by tapping their international network of industry experts and product sources. They will also offer educational and inspirational seminars to municipalities, businesses, and civic groups.