Central Florida: The Central Florida phosphate market was in the grip of the holiday schedule last week, and little or nothing was sold on a prompt basis on the spot market. Many in the industry took the entire week off, and vacations may continue until the first of the year.
Mosaic’s announcement that it will cut production by 250,000 tons during the first quarter was not completely unexpected. Domestic sales of phosphate have been well below normal, even for this time of year. However, most of the reduction will take place at the company’s production facility at Donaldsonville, where the company uses imported rock for manufacturing. Although Mosaic’s plants at Central Florida will see somewhat less production, the reduction will not be significant because of the need to produce product for export.
The Central Florida DAP price range was unchanged last week at $540-$575/st FOB, but that could easily change when people return to work. CF’s price was set at $570/st FOB, and Mosaic also was posted at $570/st FOB. MAP was listed at a $20/st premium to DAP by Mosaic in Central Florida, about the same difference as from traders. MAP continued to be in short supply. PCS Sales was selling at comparable prices to the market.
U.S. Gulf: With domestic phosphate sales down significantly for most of the fall season, rumors persisted that Mosaic would cut production. Just in time for the new year, the company announced that it will cut production 250,000 tons during the first quarter of the year.
Most of the reduction will be made at Mosaic’s plant at Donaldsonville on the river, where business has been especially lackadaisical. A source said Mosaic had been attempting to sell the ammonia it produces for the facility to manufacture phosphate. However, none of the company’s processing plants will be completely shuttered.
Earlier in December, the company was buying NOLA DAP barges, which it hoped would have the effect of bolstering the sagging market and providing additional supplies. At the time, the market had slipped $50/st FOB or more in a single week. Even that did not help.
The lackluster fall came as a surprise to many, because farmers fared well last season and had plenty of money to spend on fertilizer, equipment, and seed. Normally, they would have spent a portion of that on prepay for their fertilizer needs.
In some cases farmers did pay their dealers for prepay, but did not necessarily ask for any specific product. Dealers, in those cases, put the money in the bank and paid the farmers interest on what they received – generally around 5 percent per year. "That’s not a bad deal (for the farmers)," one trader said, "not with interest rates down."
Corn prices were up last week compared to two weeks earlier, moving to $5.80/bushel for December 2012 and $5.62/bushel for December. Soybeans for November 2012 were also higher at $11.9675/bushel, while beans for November 2013 were $11.83/bushel, up from $11.2625/bushel two weeks earlier. Wheat for July 2012 was also higher at $6.765 from $6.185/bushel previously. Wheat for July 2013 was listed at $7.295/bushel last week, up from $6.6775/bushel two weeks earlier.
Hours after Mosaic’s curtailment announcement, prices on the river began to rise and were up $25/st from their low point at the beginning of the reporting period. One trader speculated that the price could return to $500/st FOB or better within the next week or two.
Based on actual sales of prompt barges, the NOLA DAP barge price range fell last week to $425-$450/st FOB, compared with $450-$475/st FOB two weeks earlier. The lowest prices were for transactions early in the reporting period. MAP sales were quoted at $450-$455/st FOB.
Expect to pay more this week for DAP and MAP.
Eastern Cornbelt: