Central Florida: Last week DAP business out of Central Florida was primarily loaded under existing contracts and within the previous week’s price range. The reason for the lackluster phosphate sales from the area has been the high price in comparison to that of the Gulf’s NOLA river market, which has been a few dollars lower than Central Florida. That is an abnormality that has not gone unnoticed by either buyers or sellers. What has really confounded the market has been the sharp increase in rail rates and the relatively low price for shipping by barge, although barge rates are also higher than a year earlier. Both producers and phosphate buyers agree that the differential of $10-$15/st between Central Florida and the river should be in effect, but that’s where the agreement ends. Producers believe the price on the river, where demand has been quickly overtaking supply, should go up, while buyers think the price in Central Florida should be lowered to account for the higher rail freight rates.
The new wrench tossed into the works was the announcement last week that Mosaic would be reducing production at its Faustina plant for another six to 12 weeks (see page 1), after a minor explosion from a welded joint in a heat exchange vessel in its ammonia plant occurred a couple of weeks ago. Mosaic had the option of taking ammonia supplies from the pipeline, but that would involve additional cost and would help push up ammonia prices overall. Considering the fall season in the domestic markets has been sluggish, and with the export market beginning to falter, bringing Faustina back to full production would be counterproductive. Mosaic has been bringing phosphate across the Gulf to the river market to take advantage of the balance of the fall season, but barges, in general, were becoming scarce.
In the northern areas of the Midwest, which are supplied out of Central Florida, adverse weather conditions have kept farmers from planting wheat seed. That will not only have a negative impact on phosphate sales, but could also mean farmers will be returning wheat seed to their dealers, who will take a loss on that deal ?Çô possibly as much as $10/t for the seed.
Despite the negative news so far this fall season, spring sales were expected to be robust, according to most sources. The reason was that dealers and some traders have been reluctant to fill their bins. With a bit of a rush toward late fall, many of those bins were running empty last week and will have to wait until spring to be refilled. That will create transportation problems when the spring season arrives and orders are abundant ?Çô if that actually happens.
The Central Florida DAP price range last week was unchanged at $218-$219/st FOB. Customers who place large orders get the lowest prices, but sources said no discounts were available at the low end of the price range. Mosaic discounts MAP $4/st from the price of DAP, while CF has no price difference. PotashCorp’s Central Florida reference price was still at $245/st FOB. In Texas, Agrifos’ truck prices were $255/st FOB for DAP or MAP, and activity was moderate.
U.S. Gulf: As the fall season approaches in the northern areas of the country, the glut of phosphate barges began to disappear last week. While that would seem to strike a balance, it did not. Areas farther south, like on the Arkansas, will continue buying into November, so additional supplies will be needed. Meanwhile, Mosaic announced last week that production at its Faustina plant will continue to be suppressed after the ammonia plant suffered a minor explosion in a welded pipe in an exchange vessel a couple of weeks ago and the damage was more extensive than originally anticipated. The reduced production will continue for between six to 12 weeks, but in the meantime Mosaic will bring DAP and other phosphates across the Gulf to help feed the market. In its press release, the company said Miss Phos, which has been the major supplier on the river for the past few months, will be busy loading approximately 30,000 mt that PhosChem sold to ConAgra for resale into Pakistan. That will make a dent in DAP supplies for the river market, in addition to the cutbacks by Mosaic.
On the Arkansas River, terminals ran out last week, as sales continued to be somewhat brisk. CF was said to have been out of DAP for 10 days late last week, and out of MAP for 22 days at that time. Most warehouses expected to receive barges by late last week or early this week, which should help ease the situation.
The best price received for a DAP barge on the river last week was $220/st FOB, which was for a barge already on the water and moving north. The cheapest NOLA DAP barges were still in New Orleans, and could be purchased for as little as $215-$216/st FOB. Most of the sales last week were in the $218-$219/st FOB range. The NOLA DAP barge price range for last week was $215-$220/st FOB, and the price appeared to be stabilizing. The previous week, the range was $216-$220/st FOB.
Eastern Cornbelt: Brisk plowdown movement of phosphates and potash was reported in areas of southern Illinois last week. DAP pricing remained at $253-$265/st FOB, with the low reported to dealers FOB Cincinnati. Spot pricing out of most river terminals in the region fell in the $255-$260/st FOB range last week.
MAP was tagged at $255-$265/st FOB in the region and TSP remained at $235-$245/st FOB, with the low on the river and the upper numbers inland. 10-34-0 was steady at $250-$260/st FOB in the region.
Western Cornbelt: Dealers reported some brisk movement of phosphates and potash in the southern Cornbelt before last week’s precipitation. DAP and MAP remained at $255-$265/st FOB most warehouses in the region, with the low on the Mississippi River. Dealer reference pricing FOB Sioux City was quoted in the upper-$270s/st for MAP and the low-$280s/st for DAP.
TSP pricing remained at $235-$245/st FOB, with the low on the river and the high inland. 10-34-0 was unchanged at $250-$255/st FOB in Nebraska and $255-$260/st FOB in Iowa.
Northern Plains: DAP was steady at $260-$263/st FOB the Twin Cities and Winona, Minn., with MAP quoted at $258-$260/st FOB. 10-34-0 was reported at $265-$270/st FOB in North Dakota.
Great Lakes: DAP remained at $265-$280/st FOB regional warehouses, with the low in Wisconsin and the upper end reflecting dealer levels out of Michigan shipping points. MAP was tagged at roughly $262-$276/st FOB, and TSP remained at a nominal $245/st FOB in the region, where available.
10-34-0 was $255-$265/st FOB for immediate ship in the region, with Wisconsin sources quoting the market at $273-$280/st FOB for prepay and/or on a book-and-store basis for spring.
Northeast: DAP and MAP remained at $275-$280/st FOB in the region. 10-34-0 was $260/st FOB terminals in upstate New York and $270/st DEL in Pennsylvania.
U.S. Export: PhosChem had a relatively good week last week, making sales of 137,000 mt. It sold two 40,000 mt vessels to Pakistan at a delivered price of $307/mt, which resulted in an FOB price of $255/st FOB, after deducting $52/mt for ocean freight. It also sold approximately 30,000 mt to ConAgra for resale into Pakistan at approximately the same price. In addition, PhosChem sold 27,000 mt into Argentina at $250/mt FOB.
Pakistan and India, which have been making additional inquiries during the past month, continue to look promising for PhosChem in the near future.
The DAP export price range changed last week from $253-$257/mt FOB the previous week to $250-$255/mt FOB. PhosChem would like to keep the price as high as possible, because its contract with the Chinese co-op calls for sales to be made at published prices and it still has 15 vessels to deliver before the end of March.