All Posts from July 1, 2015

More summer fill programs announced – Alert

Industry sources reported that PCS Sales came out with a summer fill potash program on June 30, offering granular tons at $355/st FOB warehouses and $360/st rail-DEL for orders placed by July 10 and shipped by Sept. 30. Those prices and terms were not confirmed by the company directly, however. There were also reports that while the other Canadian potash producers had not yet announced their own programs, they were matching those levels when and where necessary.

Interoceanic Corp. also announced a summer fill program for Rentech’s premium grade ammonium sulfate on June 30. Prices under the program include $255/st FOB Pasadena, Texas, for truck tons; $275/st FOB Midwest river terminals; $280/st FOB Minneapolis, Minn.; $285/st FOB inland Midwest terminals; and $300/st FOB northern inland terminals. Customers are instructed to call for rail-delivered pricing under the program.

USDA says soybean acreage at record high – Alert

U.S. growers planted a record amount of soybeans this spring, according to USDA’s June 30 Acreage report, while corn, cotton, and wheat acreage all saw declines from last year.

USDA’s National Agricultural Statistics Service (NASS) estimated soybean planted area for 2015 at a record high 85.1 million acres, up 2 percent – or 1.4 million acres – from last year, and also up some 500,000 acres from USDA’s March 31 Prospective Plantings report. The agency said soybean acreage records were set this year in Kentucky, Minnesota, Ohio, Pennsylvania, and Wisconsin.

By contrast, corn planted for all purposes in 2015 was estimated at 88.9 million acres, down 2 percent – or 1.7 million acres – from last year and the lowest planted acreage in the U.S. since 2010. The corn total reflects a 302,000-acre drop from USDA’s March 31 Prospective Plantings report, with significant acreage declines noted in Minnesota, Indiana, and Missouri.

Cotton planted acreage took a bigger hit at 8.998 million acres this year, down a full 18 percent – or 2 million acres – from 2014. The estimate was also down some 550,000 acres from March intentions, with cotton acreage reductions reported in every producing state except Oklahoma.

All wheat planted area for 2015 was estimated at 56.1 million acres, down 1.3 percent from 2014, but ahead of the March projection of 55.367 million acres. Of this year’s total, 40.6 million acres was assigned to winter wheat, down 4 percent from last year; 13.5 million acres was spring wheat, up 4 percent from 2014; and 1.95 million acres was durum, up 40 percent from last year.

Sorghum planted area this year was estimated at 8.840 million acres, up 1.7 million – or 24 percent – from 2014, and also up significantly from March planting intentions of 7.9 million acres. This year’s sorghum total is the largest planted area in the U.S. since 2003, with acreage increases observed in every reporting state except Missouri.

Total area planted to rice in 2015 was estimated at 2.767 million acres, down from last year’s 2.939 million acres and also below March intentions of 2.915 million acres. USDA said rice acreage reductions were reported in every producing state, with the largest cutbacks observed in California and Arkansas.

NASS surveyed approximately 11,000 segments of land and more than 70,000 producers during the first two weeks of June to provide data for the report.

CF buys Yara’s GrowHow stake – Alert

CF Industries Holdings Inc. reports that it has   agreed with Yara International ASA (Yara) to acquire its 50 percent equity interest in GrowHow UK Limited (GrowHow) for total cash consideration of $580 million, making GrowHow a wholly-owned subsidiary. At closing, the GrowHow business will be consolidated into CF with a cash free, debt free balance sheet. GrowHow owns and operates nitrogen production facilities in Ince and Billingham, U.K..

"We are pleased to announce this agreement to acquire Yara’s interest in GrowHow," commented Tony Will, CF president and CEO. "The operations have an advantaged position in an import-dependent region. We know GrowHow well and expect a mid-teens return profile for the acquisition. The purchase of the remaining interest in GrowHow is a continuation of CF Industries’ track record of pursuing shareholder value-creating capital deployment."

The Ince facility is located in northwestern England and consists of an ammonia plant, three nitric acid plants, an ammonium nitrate (AN) plant and three NPK fertilizer compound plants. The Billingham facility is located in the Teesside chemical area in northeastern England, and consists of an ammonia plant, three nitric acid plants, a carbon dioxide plant and an fertilizer plant. Combined, the two facilities have the capacity to produce approximately 0.9 million st of gross ammonia, 1.2 million st of AN and 0.4 million st of NPK compounds.

As of May 31, 2015, prior to purchase accounting and on a U.S. GAAP basis, GrowHow had total inventories of £66 million, receivables of £41 million, and fixed assets of £195 million. The company also had current liabilities of £43 million, long-term payables of £14 million, and a net pension deficit of £90 million.

CF noted that the U.K. is dependent on imports of nitrogen to meet its consumption demands. Nitrogen imports primarily consist of AN and urea with ammonia accounting for a negligible portion of imports. Currently, imports of AN to the U.K. make up approximately 45 percent (700,000 st) of supply. Additionally, U.K. natural gas costs have fallen meaningfully along with oil prices. In terms of delivered cost of AN to the U.K., GrowHow is positioned at the low end of the U.K. supply curve.

CF said it has extensive knowledge of and familiarity with the GrowHow business as a result of its involvement with the GrowHow joint venture over the last five years. Earnings from CF’s 50 percent interest in GrowHow are currently included in financial statements under Equity in Earnings of Non-Operating Affiliates – Net of Taxes. Following the closing of the acquisition of the outstanding interests, the results will be included in consolidated results. The final purchase price is subject to closing adjustments. The completion of the transaction is subject to customary closing conditions and is expected to occur later this year.