All Posts from February 12, 2021

Analyst Consensus Reflects Mosaic Turnaround; Majors to Release Results Feb. 17

Earnings, Eastern Cornbelt, News, News Briefs, Saskatchewan, Tampa

The Mosaic Co., Tampa, is expected to post increases in net income for both the fourth-quarter and full-year, according to the Bloomberg Consensus, the average estimates made by major analysts. The company is expected to post fourth-quarter net income of $68 million and a full-year loss of $91 million.

It is a big turnaround for Mosaic, as the company posted year-ago losses of $921 million and $1.07 billion, respectively. In addition to citing challenging market conditions in 2019, Mosaic took major charges on its goodwill and asset portfolio.

Nutrien Ltd., Saskatoon, is expected to post fourth-quarter income of $93 million, compared to a year-ago loss of $48 million. However, the analysts estimate for the full-year is $227 million, down from the year-ago $992 million.

Analysts estimate that CF Industries Holdings Inc., Deerfield, Ill., will report lower income for both the quarter and year. Fourth-quarter net income is put at $25 million, down from the year-ago $55 million. The full-year estimate is $247 million, down from $493 million.

Mosaic, Nutrien, and CF are all expected to release their results on Wednesday, Feb. 17, after markets close.

Mosaic 4Q-20 Est. 4Q-19 2020 Est. 2019
Net Income 68 M (921 M) (91 M) (1.07 B)
Revenues 2.15 B 2.08 B 8.34 B 8.91 B
Adj. EBITDA 468 M (202 M) 1.5 B 1.35 B
Nutrien 4Q-20 Est. 4Q-19 2020 Est. 2019
Net Income 93 M (48) 227 M 992 M
Revenues 3.7 B 3.4 B 20 B 20 B
Adj. EBITDA 709 M 664 M 3.6 B 4 B
CF 4Q-20 Est. 4Q-19 2020 Est. 2019
Net Income 25 M 55 M 247 M 493 M
Revenues 1 B 1 B 4 B 4.6
Adj. EBITDA 283 M 325 M 1.3 1.6

The Andersons Invests in Renewable Energy, Organic Fertilizer

News, News Briefs, Specialty

The Andersons Inc., Maumee, Ohio, said on Feb. 11 it is making an investment in BioStar Renewables LLC, Overland Park, Kan., and is establishing an active working relationship focused on the areas of renewable natural gas (RNG) and organic fertilizer. BioStar specializes in anaerobic digestion technology that can transform animal, food, and other wastes into RNG and organic fertilizer.

“The Andersons is excited to work with BioStar and help expand their RNG presence,” said Bill Krueger, President of The Andersons Trade and Processing. “This business relationship will give us more exposure to the RNG market and different ways to monetize carbon and greenhouse gas reduction processes throughout the agriculture supply chain.”

The Andersons and BioStar are also actively evaluating opportunities to work together with regard to BioStar’s patented SuperSix™ organic fertilizer. SuperSix is an OMRI-listed ammonia fertilizer that is made from the byproducts of the anaerobic digestion process.

“BioStar looks forward to working with The Andersons to further grow our RNG and organic fertilizer business as we promote sustainable agriculture,” said Bill Love, CEO of BioStar.

To date, BioStar said it has originated and financed more than $250 million of clean energy projects across the U.S. Among its waste-to-fertilizer projects are Perfect Blend, an organic fertilizer manufacturer and distributor in Othello, Wash., and Majestic Crossing Dairy, Sheboygan Falls, Wisc.

ICL 4Q Adjusted Income, Sales Rise; Adjusted EPS Beats Estimates

Earnings, Israel, News, Phosphate, Phosphoric Acid, Polyhalite, Potash, Specialty

ICL, Tel Aviv, on Feb. 11 reported a 35 percent increase in fourth-quarter net income attributable to shareholders of the company to $65 million on sales of $1.32 billion, up from the year-ago $48 million and $1.11 billion, respectively. Adjusted net income increased 42 percent to $68 million (0.05 per share). The adjusted EPS of 5 cents versus 4 cents year-on-year beat the average estimate of 4 cents (range 2 cents to 6 cents), according to Bloomberg Consensus.

Fourth-quarter adjusted EBITDA increased 33 percent to $268 million.

“In 2020, our focus on innovative specialty products drove record operating income for specialty phosphates and the Innovative Ag Solutions division,” said ICL President and CEO Raviv Zoller.” We also had a record year at our YPH joint venture in China, our second-best year in Industrial Products, and we broke the annual potash production record at the Dead Sea.”

The CEO also highlighted the launch of production trials at the new Tetra Bromo Bisphenol A (TBBA) plant at Neot Hovav, southern Israel; beginning full operations of the salt harvester at The Dead Sea; the continued ramp- up of white phosphoric acid production at the China YPH facility; and the completion of excavation for the ramp connecting the Cabanasses mine in Spain with the company’s Suria plant.

The final integration in Spain will be completed in the first half of 2021 and is expected to increase the mine’s capacity with an expected annual run rate to reach approximately 1 million mt by the end of this year, while lowering the cost per ton.

“We also continued to reposition Innovative Ag Solutions for the future by focusing on the development of innovative products and growing our business in target markets, including Brazil – one of the world’s fastest growing agriculture markets – through our acquisition of Fertiláqua, which was completed during the first week of January 2021. We expect these and other innovative efforts to benefit the company in 2021,” said Zoller.

ICL acquired Fertiláqua, one of Brazil’s leading specialty plant nutrition companies, for $122 million (GM Jan. 8, p. 30). It said it expects to leverage Fertiláqua’s strong market presence and distribution capabilities to increase the sales of its organic fertilizers, controlled-released fertilizers, and other specialty plant nutrition products to the Brazilian market.

“The addition of Fertiláqua gives ICL a significant foothold in a major market with rapidly increasing demand for specialty plant nutrition products, and also provides a seasonal sales balance between the Northern and Southern Hemispheres,” Zoller told analysts at a group earnings call on Feb. 11.

“Going forward, we expect to grow our specialty fertilizer markets and to expand our reach in Brazil via both M&A and organic growth,” he said.

Responding to an analyst’s question about its M&A plans, Zoller highlighted ICL’s healthy balance sheet with plenty of liquidity, adding that the group’s potential acquisition focus is in the specialty fertilizers space, as well food technology.

Company-wide potash sales volumes rose 13 percent last year, to 4.67 million mt, up from 4.13 mt, due to higher output and increased sales mainly to China, Brazil, India, and the U.S. Potash production in 2020 reached 4.53 million mt, a 9 percent year-on-year increase.

Fourth-quarter potash production was 364,000 tons higher year-over-year, a 43 percent increase, which ICL attributed to increased production at ICL Dead Sea following the three-week closure in the fourth quarter of 2019 for facilities’ upgrades.

It said the higher output at the Dead Sea site was somewhat offset by lower production at ICL Iberia, mainly due to the Sallent site closure, which reduced potash production quantities by about 80,000 mt.

At ICL Boulby in northeast England, polysulfate – the marketed form of polyhalite – production was down 17 percent, to 158,000 mt in the fourth quarter of 2020, due to a power outage in November. But for the full year, production was 12 percent up year-over-year, to 709,000 mt despite the negative impact of COVID-19. Polysulfate sales volumes remained relatively stable quarter-over-quarter and increased by 13 percent year-over-year to 163,000 mt in the fourth quarter.

In terms of its potash production outlook in 2021 and 2022, ICL said it will see a production stoppage in Spain in the first quarter to complete the consolidation at its operations there.

In 2021, the group expects potash production at Sodom at the Dead Sea to be between 3.9 million mt and 4 million mt, and in Spain 700,000 mt to 800,000 mt, depending on the degree of success of the consolidation there, which it said it expects to be finalized in March or April. Zoller said the group expects to “exit 2021 in Spain at a run rate of 1 million mt,” which, he said, means group-wide potash production of close to 5 million mt.

For its Phosphate Solutions division, ICL reported a 20 percent increase in fourth-quarter sales to $501 million, up from the previous year’s $417 million. It said Phosphate specialties achieved an 11 percent increase in sales to $291 million in the quarter over fourth-quarter 2019, despite the divestment of Hagesüd Group, a German producer of premium spice blends and food ingredients for meat processing.

The company said the YPH phosphate joint venture in China continued to gradually shift from commodities to specialties and saw a year-over-year improvement in sales and operating income – due, in part, to cost-reduction efforts.

The company also highlighted higher white phosphoric acid (WPA) sales in the final quarter of 2020 versus the same year-earlier period, driven by increased volume in China, Europe, and South America, while North American sales remained stable. The WPA plant in China continued to ramp up and is scheduled to produce commercial food-grade acid by the end of first quarter 2021.

Fourth-quarter phosphate fertilizers sales were also up year-over-year, due to higher sales volumes.

ICL’s Innovative Ag Solutions division saw a 9 percent increase in fourth-quarter sales, to $163 million over the same prior-year quarter.

The company highlighted that in specialty agriculture, sales of straight fertilizers and controlled release fertilizers (CRF) continued to improve due to strong demand in all regions. It said there was a continued increase in sales to fast -growing emerging markets such as India and Turkey.

In the Turf & Ornamental sector, fourth-quarter sales were up 7 percent year-over-year, due to growth in Europe, North America, Australia, and New Zealand, and in both Turf and Landscape and Ornamental Horticulture. The company reported strong demand across most products, as buyers secured stocks in advance of any potential additional COVID-19 lockdowns.

For full-year 2020, ICL posted a decline in net income attributable to shareholders of the company to just $11 million (diluted EPS of $0.01), down from the year-ago $475 million ($0.37). Adjusted net income came in at $258 million versus FY2019’s $479 million, and an adjusted EPS of $0.20 versus the year-ago $0.37.

Full-year adjusted EBITDA fell 17 percent, to $990 million, down from $1.198 billion. Sales declined 4 percent, to $5.04 billion against the year-ago $5.27 billion.

In order to provide better clarity around expectations for 2021, ICL has issued an adjusted EBITDA guidance range of between $1.02 billion to $1.12 billion for the full year, which it said is based on commodity prices and exchange rates as of the beginning of 2021.

Based on its fourth-quarter results, the company’s board has declared a dividend of 2.65 cents per share, or approximately $34 million in the aggregate. The dividend will be paid on March 16, 2021. The record date is March 3, 2021.

Selected Segment Results

  4Q-2020 4Q-2019 FY2020 FY2019
Potash
Segment sales1 $m 379 302 1,346 1,494
Segment profit $m 40 22 120 289
Average realized price $/mt 228 274 230 286
Production ‘000 mt 1,208 844 4,527 4,159
Sales1 ‘000 mt 1,333 785 4,666 4,130
         
Phosphate Solutions
Segment sales1 $m 501 417 1,948 1,980
Segment profit $m 21 1 66 100
         
Innovation Ag Solutions
Segment sales1 $m 163 150 731 717
Segment profit $m 5 (2) 40 21
         

1 Includes sales to internal customers

Yara 4Q Adjusted EBITDA Dips 3 Percent; Beats Estimates

Ammonia, DAP/MAP, Earnings, News, NPK, Potash Muriate, Scandinavia, Specialty, Sulfate of Potash, UAN, Urea

Yara International ASA, Oslo, reported a 24 percent rise in fourth-quarter net income, to $246 million ($0.93 per share) on revenues of $2.93 billion, up from the previous year’s $199 million ($0.73 per share) and $3.03 billion, respectively. Excluding currency effects and special items, the basic earnings per share was $0.76, versus $0.80 a year earlier.

Adjusted EBITDA was down 3 percent, to $511 million from $525 million a year ago, beating the average analyst estimate of $473.3 million based on a Bloomberg Consensus (range $445.0 million to $509.0 million).

The group cited the main factors behind the fourth-quarter EBITDA result as higher deliveries and production, offset by increased gas prices. Total deliveries for the fourth quarter rose 3 percent to 9.33 million mt, with 7.01 million mt of fertilizer delivered (4Q 2019: 6.48 million mt).

Total deliveries for the fourth quarter rose 3 percent to 9.33 million mt, with 7.01 million mt of fertilizer delivered (4Q 2019: 6.48 million mt).

Yara said revenues were stable in the quarter, as improved deliveries offset lower commodity prices.

Total revenues for Europe, Americas and Africa & Asia segments

$ million 4Q-2020 4Q-2019
Nitrates 331 341
Of which: Premium 117 149
Compound NPKs 708 645
Of which: Premium 330 330
Total revenues 2,303 2,291
Of which Premium 952 1,103

Yara sees spot-priced gas costs for the first-quarter of 2021 $100 million higher than a year earlier and second-quarter gas costs $145 million higher, compared with “the record lows” in 2020.

For full-year 2020, the company reported a 17 percent increase in net income, to $690 million ($2.58 per share) on revenues of $11.73 billion, up from the previous year’s $589 million ($2.20 per share) and $12.94 billion, respectively. Excluding currency effects and special items, the basic earnings per share was $3.08 versus $3.09 a year earlier. Sales fell 9 percent.

Full-year EBITDA came in at $2.22 billion, up 6 percent on the year from $2.095 billion, while EBITDA excluding special items was essentially flat year-on-year, at $2.16 billion.

Yara reported that its total capex commitments for 2020/21 remain unchanged at $2.2 billion, and plans a total capex of a maximum $1.2 billion per annum (both maintenance and growth) from 2022 onwards.

The group is proposing a NOK20 per share dividend to the annual general meeting, bringing its total cash distribution of shareholders for 2020 (paid and proposed) to NOK52 per share.

Yara Production and Deliveries

‘000 mt 4Q-2020 4Q-2019 FY2020 FY2019
Production        
Ammonia 1,866 2,048 7,606 8,479
Finished fertilizer and industrial products (excluding bulk blends)1 5,271 5,432 21,048 22,060
         
Yara Deliveries        
Ammonia trade 539 712 1,966 2,527
Fertilizer 7,012 6,476 29,045 27,620
Industrial product 1,781 1,910 7,086 7,837
Total deliveries 9,332 9,097 38,097 37,963

1 Including Yara share of production in equity-accounted investees, excluding Yara-produced blends

Yara Deliveries

‘000 mt 4Q-2020 4Q-2019 FY2020 FY2019
Crop Nutrition Deliveries        
Urea 1,564 1,373 6,042 5,909
Nitrate 1,352 1,274 5,775 5,412
NPK 2,681 2,500 10,574 9,943
CN 363 241 1,433 1,237
UAN 253 264 1,405 1,287
DAP/MAP/SSP 188 167 1,014 1,096
MOP/SOP 323 309 1,473 1,326
Other products 289 349 1,328 1,411
Total Crop Nutrition Deliveries 7,012 6,476 29,045 27,620
         
Europe Deliveries        
Urea 253 148 1,009 796
Nitrate 981 888 4,334 4,057
NPK 705 620 2,769 2,714
CN 89 64 446 393
Other products 299 304 1,558 1,492
Total Deliveries Europe 2,327 2,025 10,116 9,452
         
Americas Deliveries        
Urea 664 678 2,692 2,615
Nitrate 323 321 1,196 1,117
NPK 1,513 1,502 6,070 5,687
CN 211 128 801 679
DAP/MAP/SSP 173 144 912 1,014
MOP/SOP 298 286 1,386 1,233
Other products 213 279 1,050 1,115
Total Deliveries Americas 3,395 3,338 14,108 13,461
       
North America 825 773 3,316 3,254
Brazil 2,090 2,140 8,813 8,438
Latin America excluding Brazil 480 425 1,979 1,769
         
Africa & Asia Deliveries1        
Urea 647 548 2,341 2,497
Nitrate 48 64 245 237
NPK 463 378 1,735 1,542
CN 62 48 186 166
Other products 70 75 314 264
Total Deliveries Africa & Asia 1,291 1,113 4,821 4,707
       
Asia 988 815 3,652 3,525
Africa 302 298 1,169 1,182
         
Industrial Solutions Deliveries        
Ammonia2 142 152 543 625
Urea2 407 420 1,577 1,792
Nitrate3 240 281 1,069 1,146
CN 56 125 348 434
Other products5 528 507 1,944 2,028
Water content in industrial ammonia and urea 408 426 1,605 1,811
Total Industrial Solutions Deliveries 1,781 1,910 7,086 7,837

1 The Africa and Asia business also includes Oceania

2 Pure product equivalents

3 Including AN Solution

4 Including sulfuric acid, ammonia, and other minor products

EuroChem Boosts 4Q EBITDA; Potash Output Almost Doubles

Earnings, Europe, News, Nitrogen, Phosphate, Potash

EuroChem Group AG, Zug, Switzerland reported a 17 percent increase in full-year 2020 EBITDA to $1.81 million, up from the year-ago $1.55 million. Sales were marginally down on the year at $6.17 billion, versus the previous year’s $6.18 billion.

“The company-record EBITDA figure comes despite the turbulence of the global coronavirus pandemic and lower average prices for fertilizers during 2020,” the group said. “The key contributors were an increase in output, strong prices for iron ore concentrate, EuroChem’s key byproduct, and favorable currency exchange rates.”

The $1.8 billion EBITDA figure beats the previous company high of $1.7 billion posted in 2011.

EuroChem’s EBITDA margin for FY2020 appreciated by 4 percentage points and reached 29 percent, which the group attributed chiefly to an increase in potash production from its Usolskiy potash plant, south of Berezniki. Usolskiy produced 2.223 million mt last year, almost double 2019’s output of 1.14 million mt.

The group cited mainly a softer pricing environment in fertilizers for the flat total sales result in monetary terms. However, it reported that mining segment sales in monetary terms improved by 36 percent on high iron ore concentrate prices, despite just a 2 percent increase in sales volumes.

EuroChem’ s total sales volumes increased 8 percent to 25.63 million mt, up from 23.62 million mt in the previous year. Fertilizer sales accounted for 70 percent of the total, accounting for 17.91 million mt. Fertilizer sales volumes were 12 percent higher year-over-year, with the group citing production increases at the Usolskiy Potash Project and the EuroChem Northwest ammonia facility at Kingisepp. It said the Northwest ammonia plant was operating at full capacity in 2020. A 10 percent rise in third-party product sales also contributed.

Sales volumes of nitrogen, accounting for 35 percent of total sales volumes, rose by 3 percent, with CAN and UAN the leading product performers. A doubling of ammonia sales volumes, representing a 6 percent share in the nitrogen segment, contributed to the performance of nitrogen fertilizers as well.

Phosphates and complex fertilizers sales increased by 9 percent in volume terms, with NPKs and MAP the major drivers. DAP sales volumes decreased by 16 percent as the group prioritized MAP production due to more favorable market conditions. EuroChem said it changed the trade flows of its phosphate fertilizers mostly in favor of the Latin American market after the imposition of preliminary duties on phosphate fertilizers by the U.S. Department of Commerce in November 2020.

EuroChem’s potash sales doubled in 2020, reaching a new high of 2.2 million mt, and reflected the further ramp-up of its Usolskiy potash operation.

EuroChem Sales

‘000 mt 2020 2019 Percent Change
Nitrogen products 8,949 8,652 +3
Nitrogen fertilizers 8,912 8,637 +3
Phosphate products & complex fertilizers 6,774 6,228 +9
Phosphate fertilizers 2,681 2,542 +5
Complex fertilizers 3,705 3,297 +12
Potash fertilizers 2,191 1,104 +98
Total fertilizer sales 17,914 15,984 +12
Total sales including third party 25,626 23,624 +8
Third party sales 5,349 4,844 +10

The fertilizer group reported its sales to Latin America rose 20 percent in 2020 to 5.1 million mt, up from in the prior year. It said the region accounted for 25 percent of its total sales, with Brazil constituting the major driver at 22 percent.

EuroChem highlighted the Latin America’s importance to the group was underlined by the full consolidation of its main distributor in Brazil, fertilizer blender and distributor, Fertilizantes Tocantins (FTO), in August 2020, and ahead of schedule (GM Aug. 21, 2020; July 17, 2020). The group said it acquired the outstanding 50 percent holding interest minus one share for US$240 million.

The group bought its original 50 percent plus one share stake in FTO in July 2016 (GM July 8, 2016). It has added three new fertilizer blending plants to the six that were already part of the Brazilian company’s portfolio. The most recent blending unit at Araguari in Minas Gerais state was opened in June 2019 (GM June 7, 2019).

EuroChem Geography of Sales

‘000 mt 2020 2019 Percent change
Europe 6,224 5,966 +4
Latin America 5,089 4,255 +20
North America 3,243 3,097 +5
Russia 4,294 5,955 (28)
Asia Pacific 6,208 3,929 +58
Africa 568 422 +35
Total Sales 25,626 23,624 +8

Gensource Potash Corp. – Management Brief

Management Briefs, Saskatchewan

Junior miner Gensource Potash Corp., Saskatoon, said on Feb. 8 that Brent Cherkas, P.E., joined the company on Feb. 1, 2021, as Project Advisor and will be a key participant in realizing the Tugaske Project. The company said he has broad experience during his 40-year career and is a veteran engineer in the potash industry.

Cherkas spent some 31 years with Potash Corp. of Saskatchewan Inc. (now Nutrien Ltd.) and thereafter took on several project advisor roles with both small and large companies, culminating with his work at the K+S Potash Canada GP Bethune mine.

DOC Issues Final Decision on Phosphate Imports; Moroccan Rates Adjusted Up, Russian Down

Featured, Morocco, News, Phosphate, Russia, U.S., U.S. Imports

The U.S. Department of Commerce (DOC) on Feb. 9 announced its final determination that phosphate fertilizer imports from Morocco and Russia are unfairly subsidized. DOC calculated a subsidy rate of 19.97 percent for Moroccan producer OCP, up from the 16.88 percent rate assessed in December (GM Jan. 1, p. 1). DOC calculated rates of 9.19-47.05 percent for Russian producers, down from the earlier 20.94-72.5 percent (GM Nov. 27, 2020).

PhosAgro rates dropped to 9.19 percent from 20.94 percent. EuroChem went to 47.05 percent from 72.5 percent, while all other Russian producers/exporters are now at 17.2 percent, down from 32.92 percent.

The U.S. International Trade Commission (ITC), which has been conducting a concurrent investigation, is slated to release its decision on or about March 25, 2021. If the ITC’s ruling is affirmative, DOC will issue countervailing duty orders, effective April 1, 2021, which will remain in place for at least five years.

“Mosaic, the U.S phosphate industry, and all American manufacturers who believe in free and fair trade appreciate the importance of today’s ruling,” said Mosaic President and CEO Joc O’Rourke. “The Commerce Department’s hard work on this case brought us one step closer to ensuring American farmers can depend on high quality, competitive American fertilizer for decades to come.”

The lowering of PhosAgro’s CVD rate to 9 from 21 percent makes sales by the company to the U.S. more attractive, said VTB Capital analyst Elena Sakhnova in a note cited by Bloomberg. More Russian sales to the U.S. could ease recent shortages and prevent a further price surge. However, she noted that trade flows are unlikely to change materially until the ITC issues its decision in March.

Iowa Co-ops Announce Plans for Merger Vote

Featured, News, Western Cornbelt

Two Iowa cooperatives – Farmers Win Co-op in Fredericksburg and Five Star Cooperative in New Hampton – announced in late January that their boards of directors have approved a definitive agreement to bring a proposed merger of equals to a member vote by this summer.

The boards of both co-ops signed a letter of intent in February 2020 to study a potential merger, and formed seven research teams with employees from both organizations to explore the expected synergies and risks of unification. The due diligence process was slowed by the COVID-19 pandemic, however.

“Our goal in facing this situation was twofold: protect our employees’ and communities’ health as best we can, and secondly to continue to operate your cooperatives in a manner that best serves your needs in this ever-changing business climate,” said Ken Smith, CEO and General Manager of Five Star, in a letter to members. “Reporting the results of the employee teams was very difficult, as we believed that being in person was beneficial for this decision.”

The two co-ops said a merger would allow the combined business to make more strategic investments by avoiding duplication and best utilizing the current physical assets and rolling stock. With slimming agricultural margins and growers making more purchasing decisions based on price rather than past loyalty, the two co-ops said unification will allow the business to grow faster than the cost to compete.

“Due Diligence is a critical component of the process. It helps identify the true benefits for our members as well as our employee teams,” said Trent Sprecker, General Manager of Farmers Win. “For this reason, we continued the collaboration throughout 2020 with the boards and employees. I believe we benefited from this additional time.”

No date has been set for the proposed vote and no other details were revealed, including which name the combined business would operate under and whether any existing locations would close due to overlapping territories. For the merger to proceed, a two-thirds majority of voting members is needed to affirm, with a voter turnout of greater than 50 percent for each business.

Farmers Win has 17 locations and more than 200 full- and part-time employees offering grain, agronomy, energy, and feed products and services to growers in northeastern Iowa and southeastern Minnesota. Five Star offers crop inputs, precision ag services, grain marketing and handling, energy, feed, and hardware products from 18 locations serving growers across 14 counties in north-central and northeastern Iowa.

“Both cooperatives are financially strong and similar in size, which creates a rare merger of equals opportunity,” said Tom Shatek, Five Star Board President. “By putting our resources together, we believe we will have a better ability to control our local cooperative and better position ourselves for the future.”

USDA Cuts Corn/Soybean Stocks, but Misses Analyst Predictions; Corn Reacts with Volatility

Featured, News, U.S.

The Feb. 9 World Agricultural Supply and Demand Estimates (WASDE) report lowered U.S. corn ending stocks by 50 million bushels from last month, to 1.5 billion bushels, with exports raised 50 million bushels due to historically large corn purchases by China. The supply/demand balance pushed up USDA’s season-average corn price estimate by 10 cents/bushel.

Increased exports and lower stockpiles were also reported for U.S. soybeans, with ending stocks falling 20 million bushels from last month, to 120 million. If realized, USDA said soybean ending stocks would be down 77 percent from 2019/20 and the lowest since 2013/14. The supply/demand outlook for 2020/21 U.S. wheat was largely unchanged from last month.

Corn futures in Chicago climbed in advance of the report, touching a new seven-year high amid expectations that the domestic inventory outlook would be cut even more because of increased demand from China and negative impacts to exports and output in South America due to adverse weather. A Bloomberg survey of analysts before the report’s release suggested that USDA would reduce estimates for corn and soybean stockpiles by 11 percent and 14 percent, respectively.

After the report, corn futures plunged and erased those early-week gains, but then regained momentum after USDA on Feb. 11 reported higher net exports of corn and soybeans, with both crops some 34 percent ahead of their respective five-year averages for the week ended Feb. 4, Bloomberg reported.

“In general, the WASDE was a bit of a disappointment for market bulls,” said Alexis Maxwell, Green Markets Research Director. “Leading into the report, analysts expected USDA to cut U.S. corn ending stocks by 168 million bushels on Chinese buying, but those bulls were disappointed when the actual cut was only 50 million bushels. To add further supply pressure to the corn market, global corn ending stocks were raised against trader expectations for a 4.5 million metric ton reduction. Corn prices fell on the higher-than-expected corn supply.”

The next major USDA market mover comes on March 31 with the release of both the Prospective Plantings and Quarterly Grains Stocks reports. The Prospective Plantings report is expected to show an increase in corn acreage with current estimates at 92-95 million acres, while the Grains Stocks report, historically a sleeper, has increasingly brought surprising adjustments to inventory levels and subsequent volatility for grains prices.

“The most important factor to watch now is the extreme cold hitting the Midwest and when temperatures will clear enough for farmers to get in the field,” Maxwell added. “Soil temperatures need to be above 50 degrees F to kick off the season, and right now Western Cornbelt soil temps are near 20-30 F with more extreme cold on the way, seemingly squashing hopes for an early start to the season.”

Aussie Potash Receives Organic Approval

Australia, News, News Briefs, Specialty, Sulfate of Potash

Junior sulfate of potash (SOP) developer Australian Potash Ltd. (APC), Subiaco, Western Australia, reported on Feb. 9 that its K-Brite SOP from its Lake Wells Project (LSOP) in Western Australia has been classified by ECOCERT, a European organic certification agency, as suitable for use in international organic farming in compliance with European regulations.

Some 30,000 mt/y of K-Brite will be distributed to Europe through a take-or-pay agreement with Helm AG (GM Aug. 14, 2020). Helm will also be marketing 20,000 mt/y of the product to the U.S. (GM Nov. 25, 2020).

APC said 100 percent of its projected output of 150,000 mt/y of SOP has been booked under binding take-or-pay agreements. APC plans to produce three organically certified grades: granular, fertigation, and standard.

Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.

For additional details visit our Terms of Use.