All posts by webster@kennedyinfo.com

Potash

California, Eastern Cornbelt, Market Watch, Pacific N.W., Potash Muriate, Western Canada, Western Cornbelt

Eastern Cornbelt: The potash market remained in the $535-$540/st range FOB most regional warehouses.

Western Cornbelt: Potash pricing was steady at $525-$547/st FOB, depending on grade and location, with the low reported in southern Missouri and the upper end quoted for white granular tons in northern Missouri.

California: The potash market remained flat at $590-$610/st FOB California warehouses, depending on grade and location. Sulfate of potash (SOP) was unchanged at $695-$705/st FOB, and potassium nitrate was steady at $1,020/st FOB for bulk tons and $1,090/st FOB for bags.

Pacific Northwest: Potash pricing remained at $595-$610/st rail-DEL in the Pacific Northwest region, depending on grade and location. Potash pricing at Utah mine locations ranged from $530-$540/st FOB. Sources reported very little new business to test the potash market, as many suppliers had reportedly purchased tons last fall to cover their spring needs.

The K-Mag market was steady at the $431/st FOB level in Washington.

Western Canada: Potash pricing remained at $607-$632/mt FOB regional warehouses, depending on grade and location. The market to Canadian customers FOB Saskatchewan mines was pegged in the $592-$601/mt FOB range.

Sulfur

Market Watch, Sulfur, Tampa, Vancouver

Tampa: There was no real change in the supply and demand scenario last week, but the quarter will end next week. However, a source said a settlement for the second quarter will probably not come until near the end of April. By that time, the picture should become clearer.

Phosphate producers held back on full-scale production during the first quarter of the year, which was not a surprise because their markets were very slow and sales were down. However, spring has sprung and farmers were in the field last week, and fertilizers, including phosphate, will be going on the ground. An early spring generally means a good season, so sales should begin to increase during the next few weeks.

Mosaic has been buying molten sulfur at below market prices and putting it on the ground in Texas. That – and full tanks – will help improve their bargaining position.

Vancouver: Spot prices in China have been on the rise, but that may not continue much longer, because phosphate sales from there may not be that competitive in the near future. However, quarterly contracts were up for renewal at Vancouver, and that may help sellers.

Barge restrictions, plant outages affect fertilizer availability

Ammonia, Featured, Midwest, News, UAN

Unplanned plant outages and weather-related restrictions to commercial barge traffic were impacting fertilizer availability in the Southern Plains market last week. “It’ll make things pretty tight,” said an industry source on Thursday.

Flood warnings were in effect on March 21-22 in eastern Oklahoma after up to eight inches of rain hit the area earlier in the week. The flood warnings covered all or portions of 11 counties in the state, with flooding reported along portions of the Poteau and Neosho Rivers, two tributaries that feed into the Arkansas River.

Barge traffic on the Arkansas River was slowed last week because of fast currents and high water levels, which had reportedly closed at least one lock and caused problems at docks. Industry sources reported some restrictions to barge traffic at the Port of Catoosa in Tulsa, Okla. Port authorities told Green Markets on March 23 that there were “no major impacts” to the port, but some commercial barge restrictions are likely.

In a statement on March 22, the Corps’ Tulsa District said it “expects there to be an impact to navigation traffic along the McClellan-Kerr Navigation System for approximately the next two weeks due to the amount of flow expected to be coming down the system.” A Corps spokesperson told Green Markets that expected discharges of up to 150,000 cfs into the system will likely require larger tugs to push barges, at least through April 2.

The McClellan-Kerr system originates at the Port of Catoosa and runs southeast through Oklahoma and Arkansas to the Mississippi River, primarily following the Arkansas River, but also following portions of the Verdigris River in Oklahoma and the White River in Arkansas.

The barge restrictions were not the only development impacting fertilizer availability in the region. LSB Industries Inc. announced that its Pryor, Okla., facility was shut down on March 15 for unplanned maintenance.

The company said plant personnel identified excess heat in areas of a high temperature, large diameter pipe in the ammonia plant. As a precautionary measure, LSB said ammonia production was shut down while the pipe is removed and the cause of the excess heat determined and repaired.

LSB confirmed that maintenance has also been underway on the Pryor urea plant for several weeks, during which the facility has not produced UAN but has been producing and selling ammonia directly into the fertilizer market. LSB expects to resume ammonia and UAN production at Pryor before March 31, but said it would announce when production of both products is back online.

LSB estimates that the effect of the ammonia plant and the urea plant maintenance outages in March will result in approximately $4 million less operating income than otherwise would have been expected.

Earlier this month (GM March 19, p. 1), Koch Fertilizer LLC and CF Industries notified customers that urea loading had been suspended at Koch’s Enid, Okla., plant, and UAN loading was suspended at CF’s Woodward, Okla., plant. CF alerted customers three days later on March 12 that UAN loading had resumed at Woodward, but supplies were on allocation. Industry sources said urea loading had resumed at Enid as well, though that was not confirmed by Koch.

Icahn extends deadline for CVR tender offer; CVR board reaffirms its rejection

Featured, News

Billionaire investor Carl Icahn has extended the deadline from March 23 to April 2 for CVR Energy shareholders to tender their shares in his hostile takeover attempt. Icahn also released another letter criticizing the CVR board and urging shareholder support for his offer, which produced another rejection from the CVR board.

Icahn announced on March 16 that he had pushed the expiration for his CVR tender offer to the end of Monday, April 2, instead of the end of Friday, March 23. Icahn also announced on March 16 that he had pushed out his deadline to resell the company to 15 months instead of nine months. CVR owns two refineries and majority ownership of CVR Partners LP, which owns a nitrogen plant in Coffeyville, Kan.

Icahn had previously stated that he would drop his $30 per share bid for CVR, a deal valued at some $2.6 billion, if less than 36 percent of the outstanding shares had been tendered by March 23 (GM March 19, p.1). Icahn currently owns 15 percent of CVR. In a letter to shareholders after Icahn’s initial offer in February (GM March 5, p. 1), CVR Chairman and CEO Jack Lipinski told shareholders to reject the offer, calling it “opportunistic” and "inadequate.”

On March 19, Icahn released another appeal to CVR shareholders, criticizing the CVR board for “distorting the facts,” and singling out Lipinski and his personal earnings as an indication that the CEO is “more interested in empire building than in increasing value for shareholders.”

In the letter, Icahn once again touted his own recent energy investments. “As my past record has demonstrated, I work assiduously to increase the value of stocks in which my companies have invested, which has led to gains of billions of dollars for all shareholders, not just my firm,” the letter says. “Over the last few years, our actions have led to an increase in aggregate market value of more than $55 billion for shareholders at well over a dozen companies we have targeted that had a market value of under $20 billion when we first invested.”

Icahn refers to Lipinki’s claim that the CEO generated a return of 588 percent over the last three years as “a blatant obfuscation of the facts,” arguing that as of Jan. 13, 2012, CVR stock had risen only $3.25 per share from its October 2007 IPO price of $19 per share, after falling to as low as $2.25 per share in October 2008.

“For his part, Mr. Lipinski has fared much better than shareholders,” Icahn continued. “Over the four years from 2007 to 2010, Mr. Lipinski earned over $28 million in cash and equity compensation for this dismal performance (this does not even include his compensation in 2011, which has not yet been reported). No wonder he disagrees with our strategy of selling the company.”

Icahn also criticized CVR’s decision in 2011 to acquire Gary-Williams Energy Corp in Wynnewood, Okla., for $592 million, saying “CVR overpaid substantially” for the asset. “What (Lipinski) should have done, in my opinion, was use the money for a shareholder buyback or a large dividend, which I believe would have substantially increased the value of the stock,” Icahn said.

Icahn further charged that CVR’s selling, general, and administrative costs have remained the highest of its competitors over the past three years under Lipinski’s leadership, citing in part the fact that CVR’s headquarters are in Sugar Land, Texas, while the majority of its operations are in Coffeyville, Kan.

Icahn also countered claims that there are numerous contingencies to his offer, arguing that “there are not even financing or due diligence conditions,” and reiterated his view that the $30 per share offer is “compelling” and “a win-win” for shareholders.

“If I

Glencore to acquire Viterra; Agrium and Richardson agree to purchase certain Viterra assets

Featured, News, Western Canada

Glencore International PLC and Viterra Inc. announced on March 20 that they have signed a definitive agreement in which Glencore has agreed to acquire all of the issued and outstanding shares of Viterra for C$16.25 per share. The transaction values Viterra’s equity at approximately C$6.1 billion on a fully diluted basis. The transaction will be funded out of Glencore’s existing cash resources and available credit facilities.

The deal also involves Agrium Inc. and Richardson International, a privately held grain trader and input retailer based in Winnipeg. Agrium reported that it has entered into a definitive agreement with Glencore to acquire the majority of Viterra’s Agri-products business, and Richardson announced that it has agreed to acquire more than C$900 million worth of Viterra’s grain handling assets, crop input and processing facilities, and related working capital.

“The acquisition of Viterra reflects our strong belief in the importance and future potential of the Canadian and Australian grain markets,” said Chris Mahoney, director of Agricultural Products for Glencore. “This is an exciting opportunity to deliver the real benefits that can be generated through the combination of Glencore’s and Viterra’s respective assets, people, and know-how to both farmers and customers in Canada, Australia, and further afield.”

Glencore, a multinational mining and commodities trading company headquartered in Baar, Switzerland, said in a statement that the Viterra acquisition is consistent with its strategy of strengthening its position as one of the global leaders in grain and oilseeds markets.

“Viterra’s Tier 1 portfolio of assets in Canada and Australia will allow Glencore to build upon its position as one of the world’s largest commodity suppliers and provides the opportunity to leverage Glencore’s extensive global networks, expertise and best practices in order to create additional value across its agricultural businesses,” Glencore said.

"Viterra employees created a world-class agri-business, of which I am very proud,” said Mayo Schmidt, Viterra’s president and CEO. “This has been recognized by Glencore and its partners, and this transaction creates value and opportunities for employees, our communities, farmers, and customers in all the markets we serve.”

In a March 20 teleconference after the deal was announced, Schmidt said “it was no surprise in recent months to see our success acknowledged by our peers and to receive expressions of interest from around the globe. As a public company, we must continue to grow and continue to evolve.”

Under the agreement, Agrium would acquire approximately 90 percent of Viterra’s 258 Canadian retail facilities, more than tripling its retail outlets in Western Canada with the addition of some 200 stores. Agrium will also acquire all of Viterra’s Australian retail facilities, as well as their minority position in a nitrogen facility located in Medicine Hat, Alberta. The Alberta plant is majority owned by CF Industries.

Agrium currently operates 65 Canadian-based facilities as part of its total of 1,200 retail facilities in the U.S., Australia, Argentina, Canada, Uruguay, and Chile.

Agrium valued the acquisition price from Glencore at approximately C$1.15 billion, plus an estimated C$0.5 billion in working capital, in a back-to-back purchase and sale arrangement. In 2011, Viterra’s total Agri-products business generated C$2.4 billion in revenue and C$244 million in EBITDA, according to Viterra’s annual report.

“We believe our Crop Production Services Retail business can provide significant value for Canadian farmers and that it provides an opportunity for growth in a market where we currently have a limited retail presence,” said Agrium Presid

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 86.79 83.15 87.52
CF Industries CF 182.44 181.15 122.56
Intrepid Potash IPI 24.33 23.62 33.48
Mosaic MOS 56.27 55.26 76.21
PotashCorp* POT 45.44 42.87 55.06
Terra Nitrogen TNH 228.14 225.99 109.70
CVR Partners UAN 26.65 25.22 N/A
Distribution/Retail
Andersons Inc. ANDE 48.17 47.87 46.32
Deere & Co. DE 80.43 81.64 91.05
Scotts SMG 52.70 53.11 56.78
* represents three-for-one stock split

Potash America Inc. – Management Brief

Management Briefs

Potash America Inc., Reno, Nev., announced the addition of James Leonard to the company’s advisory board. “Jim’s experience in mining, investment banking, and international corporate finance are a perfect match for PTAM,” said Barry Wattenberg, the company’s president and CEO. “Jim’s assignment will be Advisory Board Member with responsibility for Special Projects.”

Brandt – Management Brief

Management Briefs

Brandt, Springfield, Ill., a leading manufacturer of agricultural specialty products, announced that its national sales director, Dr. Julian Smith, is a 2012 recipient of the Fluid Fellow Award presented by the Fluid Fertilizer Foundation (FFF). The award recognizes Smith’s leadership in research, education, and contributions to the fluid fertilizer industry.

“This is a real honor as it comes from the industry I love and the peers I respect,” said Smith, who was one of the founding members of the FFF in 1982, and served as research director for the National Fertilizer Solutions Association/FFF prior to joining Brandt. “We congratulate Julian on his tireless work and research over the last 30 years,” said Rick Brandt, Brandt president and CEO. “We are extremely fortunate to have such a knowledgeable and talented individual on our team, and we look forward to the innovations that Julian will help us bring to agriculture practices in coming years.”

Israel Chemicals Ltd. (ICL) – Management Brief

Management Briefs

Israel Chemicals Ltd. (ICL) has made a number of management appointments in light of executive retirement plans. Mr. Yossi Shahar, 63, executive vice president, corporate development, since 2008, plans to retired March 31, 2012, while Nathan Dreyfuss, 60, vice president, finance, since 1994, plans to step down April 30, 2012.

Shahar will be replaced by Mr. Avi Doitchman, currently executive vice president and CFO, who will be appointed executive vice president, CFO and strategy, and will be responsible for corporate development, strategy and regulatory affairs. Doitchman will be assisted by ICL’s current controller, Mr. Amir Benita, 38, who will be promoted to the position of vice president, accounting; by Mr. Hezi Israel, 44, who will be promoted to the position of vice president, business development and strategy; and by Mr. Yakir Menashe, Adv., 40, who will be promoted to the new position of vice president, regulatory affairs and compliance. The latter is a new position that will be responsible for all of the company’s activities related to global regulations and enforcement issues, both in Israel and throughout the world.

Menashe has served as assistant to the CEO for the past six years. He holds a B.A. in Law from the College of Management, and worked previously for the law firm Efrati Galili and Partners, where he specialized in securities law, transactions, and mergers and acquisitions.

Most recently, Israel has served for the past five years as vice president, strategy and business development, for ICP Products Inc. He holds an M.B.A. from Tel Aviv University and a B.A. in Economics and Political Science from Tel Aviv University.

Benita has served during the past five years as ICL’s controller. Previously, from 2001-2009, he served as a lecturer for the College of Management, and as a senior manager for the Ernst & Young accounting firm. He is a CPA and holds a B.A. in Business Management from the College of Management.

Dreyfuss will be replaced by Michael Hazzan, 46, who will be promoted to the position of vice president, finance. Hazzan, a CPA, has worked in ICL’s finance department for 18 years, including five as the company’s group treasurer. He holds a B.A. in Economics from Tel Aviv University and an M.A. in Economics from Bar Ilan University.

Canpotex, BPC sign new K contracts with China

News, News Briefs, Potash Muriate, Vancouver

Vancouver — Canpotex Limited on March 20 signed a contract with Sinofert Holdings Limited to supply 500,000 mt of potash in the second quarter of calendar 2012. The new contract includes an option to increase this tonnage by an additional 200,000 mt for delivery during that same period. Pricing is unchanged from the previous second-half 2011 contract. The contract is the third concluded under the three-year Memorandum of Understanding signed with Sinofert in October 2010. Steven Dechka, Canpotex’s president and CEO, said this latest contract demonstrates the continued confidence Sinofert has in Canpotex’s ability to meet the growing needs for potash in the important China market. Sinofert is China’s largest integrated agricultural company and a long-term business partner of Canpotex. Belarusian Potash Co. (BPC) the joint venture trader of Uralkali and Belaruskali, also announced that it has agreed to a contract with Sinochem and CNAMPGC for 400,000 mt of potash in the second quarter – with an option for an additional 100,000 mt – at a price of $470/mt CFR. The contract is valid from April 1 to June 30, Uralkali said in a statement.