Manchester, Conn.-Central Connecticut Co-op Farmers Assn. is partnering with U.S. Sustainable Energy of Natchez, Miss., to produce an organic fertilizer from agriculture wastes using a carbonizing process that also yields biofuels and biogas, according to co-op officials. Central Conn Co-op told Green Markets that preparations are underway to use 2,000 pounds of the dry 7-3-7 fertilizer on test plots growing corn, vegetables, tobacco, and other crops. Eventually, the co-op plans to open a facility to produce both the fertilizer and biofuels to help boost the economy in the agriculture area. At the same time, U.S. Sustainable Energy announced its initial sale of 2,000 pounds of the carbon-based fertilizer to Vegetable Energy Group, LLC, doing business as Vee-Go Energy. Vee-Go successfully completed solubility and time release tests with Central Conn Co-op. Sustainable Energy Chairman and CEO John Rivera said the sale price of 15 cents per pound helps boost the product’s commercial viability since it was much higher than anticipated. Vee-Go’s CEO Michael Garjian added, “The carbon ash product is undergoing additional testing in Virginia to validate whether the activated carbon within the fertilizer can render toxins inert by absorbing them in the soil.”
U.S. Gulf/Tampa: The Tampa market remained quiet last week with the last done business still $360/mt DEL. Buyers, citing pressure on the Black Sea market, predict that the next numbers will be lower.
In the meantime, there were rumors that new business may have occurred, though there was no firm word on new numbers. As reported last week, the price pretty much depends on logistics, though the betting this time around is that prices will dip again, especially since some players are starting to get nervous about a long stretch of wet weather in the Cornbelt.
Eastern Cornbelt: Much of the region continued to experience stormy weather conditions that made fieldwork nearly impossible. Sources talked of the impact these weather delays will have on preplant ammonia movement and on phosphate and potash volumes. One source said he expects minimal cutbacks in nitrogen rates, but the late start could result in phosphate reductions.
Those still registering optimism for ammonia usage this spring said farmers will likely remain with the product because the alternatives are hard to find and high priced. Although ammonia reference prices remained in the $470-$480/st FOB range in the region, Illinois sources said the cash market was closer to $465/st FOB for the limited spot business taking place.
Western Cornbelt: Wet, wintry weather continued to slow field activities and fertilizer movement. There was little new business to test the spot ammonia market. Iowa and Nebraska sources quoted the market at $440-$460/st FOB, while reference prices were quoted by Missouri dealers in the $470-$480/st FOB range. Forward contract offers for May were available from one supplier at $455/st FOB in Nebraska, $460/st in Iowa, and $470/st FOB in Missouri.
California: The ammonia market remained firm at the $475/st truck-DEL mark in the state, with brisk movement reported in recent weeks. One supplier reported low inventories last week, but an incoming 28,000-ton vessel was due on Thursday from Trinidad. Sources also reported heavier agricultural use of aqua ammonia in parts of the state due to tight UAN supplies.
Pacific Northwest: Anhydrous ammonia pricing continued to be quoted at $440-$450/st DEL in Idaho and Montana, and $455-$475/st DEL in the rest of the region. The FOB market was referenced at the $460/st mark in Washington, with one supplier offering forward contract tons for May at $470/st FOB Ritzville and Tokio, Wash.
Western Canada: As of April 6, anhydrous ammonia pricing in the region was reported at $809-$844/mt DEL, up just slightly from last report.
Black Sea: Rumors continue that the price has dropped to $260/mt FOB, but Asian sources say nothing has been done at that level yet. Sources put the market just below $270/mt FOB, with downward pressure building. The best bet by Asian sources puts the market at $265-$268/mt FOB at midweek, with producers fighting and clawing to prevent further erosion in the price.
The main forces pushing the price down, say sources, are the combined efforts of reduced demand from the United States and a growing inventory by the producers. Asian observers note that even with strong demand from India and Asia and with the vessel line-up getting stronger with each week, the inventory levels are building faster than the ships that are coming in. End users are pressuring traders for lower prices, and that pressure is being transferred to the producers. And producers seem to have nowhere to go.
The one shining hope for producers is that the Middle East continues to be oversubscribed. Buyers looking for any tons are, by default, forced to go to Yuzhnyy. Reportedly, Yara picked up tons for IFFCO in India. At the same time, even buyers from South Korea and Taiwan are considering purchases from the area.
Sources say the American buyers are watching the situation closely. One trader noted that the market could be near the bottom. The trick now, he said, is for the large buyers – the Americans – to jump in just as the price hits bottom rather than as the market rebounds.
Right now, the sales that are being watched closely are the Indian, Korean, and Taiwanese. Even a price at $260/mt FOB, said one source, would mean $370/mt CFR into South Korea. That is about the level Taiwan is paying right now, and Taiwan usually pays $5-$10/mt more than the Korean buyers.
If deals to the two big Asian buyers of Taiwan and Korea start to come in at $370 CFR or below, sources say there is still room for softening. However, they add, if the Asian price begins to move up, then the conventional wisdom holds the price is due for a rebound.
Middle East: With strong demand continuing from India, sources say the price remains firm in the $320s/mt FOB. The current price has a number of buyers complaining that by all rights the price should be $290-$300/mt FOB when compared to the Yuzhnyy price.
Demand remains strong from India. Some of the buyers there are getting upset with the high price being forced on them from the producers. Recent purchases from Yuzhnyy seem to be as much an effort to find cheaper ammonia as they are a means to send a message to the Middle East suppliers to lower their prices.
The impact of picking up tons from Yuzhnyy is expected to be felt soon as buyers begin to look for spot tons once the contracts run out.
Another factor in the pricing game is the lack of a phos acid purchasing deal for India. Once the deal is sealed – most likely by the end of the month – sources say demand for ammonia will drop.
For now, however, pricing from this region has become a combination of demand – mostly from India – and problems in production.
The Safco IV plant has had a checkered history in its attempts to keep running. Sources say it is now operating just fine, but that Sabic still owes at least two months of production to pay off its swap deals dating back to November 2006.
Now the QAFCO IV facility is down. Sources in Asia are not sure how long it will be out of action, but the lost production from this plant continues the tightness of supplies.
Lastly, the new Iranian facility is also not expected to be online any time soon.
Asia: The simplest description of the Asian market is, “Tight. Tight. Tight.” The major industrial forces – Japan, South Korea, and Taiwan – continue to take as many tons as possible and show no signs of easing off. Sources say their downstream buyers are showing healthy growth in sales and profits, thereby removing at least one element of attempts to lower prices.
Japanese buyers may begin to feel a pinch soon, however. Late April will mark the beginning of a series of rolling maintenance shutdowns by domestic ammonia producers. While most buyers have already taken steps to build reserves or get their tons from elsewhere, there are reports circulating that demand for the next couple of months may outstrip supply during this shutdown period.
The joint venture operations in Indonesia – KPA and KPI – continue to operate at full capacity.
Sources report that KALTIM is now devoting more of its energy to producing urea for export. The result, said one trader, is less ammonia for export. So far, he said, the reduction of KALTIM output has not yet hurt any single market, but some buyers could soon find getting extra spot tons increasingly difficult.
UREA
U.S. Gulf: Prices appeared to be under some stress last week, though some sellers claimed this was just a lull due to wet weather in the Cornbelt. Sellers remained convinced that the U.S. will be short 1 million st of urea for last year’s corn crop, much less the 90.5 million projected by USDA for this year. However, continued wet and cold weather is raising concerns that the acreage or the yields will be what farmers and USDA may have expected.
Most were putting prices in the $360-$363/st FOB range, with one large player claiming they had moved below $360/st FOB. Such could not be confirmed, with some suggesting those were really forward or paper numbers, not the cash market. Another week should tell for sure.
In the meantime, new imports of prills were reported to have been putting pressure on that market, which sources called $325-$330/st FOB.
Eastern Cornbelt: Granular urea was steady at $395-$405/st FOB regional terminals, with the low in Illinois and the higher numbers quoted by Ohio sources.
Western Cornbelt: Granular urea was pegged at $390-$400/st FOB in the region, down just slightly from last report. Central Iowa sources also reported delivered urea at the $400/st mark last week. The dealer market FOB Arkansas River terminals in Oklahoma was quoted at $385-$395/st, depending on supplier.
California: Urea pricing in the state was up from last report. Delivered urea was quoted at $420-$425/st, with the FOB market at $395-$405/st.
Pacific Northwest: Delivered urea was generally quoted at $420-$430/st in Idaho and Washington, with the Montana market pegged at $410-$417/st DEL. One supplier was offering forward contract urea for May at $435/st DEL in Washington, Idaho, Oregon, and Utah, and $415-$420/st DEL in Montana.
Agrium reposted granular urea on April 5 at $412-$417/st DEL in Montana and Wyoming, depending on location; $425/st FOB Washington warehouse locations at Glade, Kennewick, Warden, and Wilson; $430/st DEL in Washington, Oregon, Idaho, and northern Nevada; $435/st DEL in northern and central Utah; and $440/st DEL in southern Utah.
Western Canada: Granular urea pricing remained at $550-$575/mt DEL in the region, with some sources citing the resumed walkout by striking UTU conductors and yard workers at the Canadian National Railway as a compelling reason for market strength. “The Gulf may be showing some signs of weakness, but I have not yet seen it in Western Canada,” said one source. “With the CN up to its old tricks, I would suspect we won’t for a while longer as people may have to creatively shift around material in the region.”
Black Sea: Producers are fighting hard but losing, said one trader. Prices continue to slide. One trader noted that $280-$281/mt FOB was concluded and that lower prices are on the way. With the absence of India and Latin America, sources say there is no reason for prices to move up.
Middle East: Prices in this region continue to defy the math of conventional wisdom. Given the freight differences between Yuzhnyy and the Arab Gulf, sources say the price in this region should be down significantly. Unfortunately for buyers, however, granular and prills remain in the $320s/mt FOB.
Steady cargoes under contract are keeping the order books full. As a result, there are no spot deals to peg a new price.
India: While no decision has been made yet to begin importing, the government has taken steps to better control the subsidies it pays for urea.
Last year the government was deeply in debt to urea manufacturers because of the rapid rise in the cost of urea. The subsidies it was required to pay were nearly double those of the previous year. This year the government will pay subsidies to manufacturers only for material that actually reaches the regional holding areas. In the past, the subsidies were paid for urea shipped from the factory.
Local distributors and farmers complained during the previous application seasons that urea was not distributed fairly, with some areas showing a dramatic shortage despite record production and imports.
The Fertilizer Ministry will monitor the entire process through its web site. The ministry said that by posting subsidies and distribution information on the Internet, it would provide a more transparent process for the public.
To avoid further complaints from farmers, the government also announced it would maintain a buffer stock of 50,000 mt in each state for the coming application season, local media report.
The government claims a reserve already on hand of 2 million mt. This amount will be divided among the various states.
The government plans to conduct a similar program with other fertilizers.
The Fertilizer Secretary called on local distributors to make as much use of domestic urea as possible because of the higher cost of imported urea. He added that even though imported urea will be significantly more costly, imports will soon begin to ensure plenty of material for farmers.
Vietnam: Local media report the country imported 114,000 mt of urea during the first quarter. Most of those tons came from China, with a few cargoes from Indonesia, the CIS, and the Middle East. Sources estimate that most of those tons were for blenders or industrial use rather than direct application.
According to the government figures, the country’s imports were down 22 percent compared to the same period last year.
The average cost was about $209/mt CFR.
Demand for this year is expected to hit 1.8 million mt, with domestic producers covering the bulk of the orders.
Importers remain wary of making too many deals for urea. In the past the managers of the Phu My plant kept an eye on the international price to make sure their own urea was priced just below the imported cost. Regional and local buyers would then shun the imported tons in favor of the Phu My material.
With more urea production plants on the drawing board, opportunities for international traders to do business in Vietnam are waning.
Bangladesh: BCIC is seeking 100,000 mt of urea. It has issued a tender to import 25,000 mt of prills and 25,000 mt of granular in bags to Chittagong, and another 25,000 mt of each product for Monglo. The minimum offer quantity is 12,500 mt. Offers will be received through April 30.
NITROGEN SOLUTIONS
U.S. Gulf: UAN continued to be the hot ticket on the nitrogen market last week, with barges going for $260-$263/st FOB ($8.13-$8.22/unit). Some ammonia players were betting that there simply would not be enough UAN to help out the wet weather folks in the Cornbelts, and that many farmers would still need ammonia for sidedress.
Eastern Cornbelt: UAN-32 was quoted in the $280-$290/st ($8.75-$9.06/unit) range FOB regional terminals, with reports of spot business taking place at the upper end of that range. “There are always some in-season buyers that aren’t even looking at the cost,” said one Illinois source. One regional supplier moved its reference prices to the $9.00-$9.15/unit FOB range at midweek, while another was offering forward contract UAN-30 for May at $293-$297.80/st ($9.16-$9.31/unit) FOB in the region, depending on location.
Western Cornbelt: UAN was in very tight supply, with sources in some areas reporting much higher pricing. Iowa dealers reported the low end of the range still at the $280-$285/st ($8.75-$8.91/unit) FOB level out of spot river terminals, with postings now at the $9.00/unit mark or higher. A Missouri source, by contrast, said dealer reference pricing was now as high as $300/st ($9.38/unit) FOB Missouri River locations, with confirmed sales at that level. One regional supplier was listing forward contract UAN-32 for May at the $297.80/st ($9.31/unit) level FOB Winona, Minn.
California: UAN-32 was quoted at $305-$315/st ($9.53-$9.84/unit) FOB in the state, with delivered UAN tagged at $325-$335/st ($10.16-$10.47/unit) last week.
Pacific Northwest: The UAN-32 market was quoted at $305-$315/st ($9.53-$9.84/unit) DEL in the region, up from last report. Product was in tight supply and on allocation from several regional suppliers. Agrium’s April 5 UAN-32 postings included $305/st ($9.53/unit) DEL in Washington, Oregon excluding Malheur County, and northern Idaho, and $335/st ($10.47/unit) DEL in Montana and northern Wyoming. Agrium reposted UAN-28 on April 5 at $293/st ($10.46/unit) DEL in Montana and northern Wyoming.
Western Canada: UAN-28 remained firm as well at $341-$356/mt ($12.18-$12.71/unit) DEL in the region.
AMMONIUM NITRATE
U.S. Gulf: A new vessel of AN was reported to be unloading last week to supply what most call a tight market. Reports were that product was being offered at $270/st FOB. The last done was a firm $265/st FOB, say most sources.
Western Cornbelt: Ammonium nitrate was pegged at a firm $325/st FOB in the region, with the Southern Plains market now quoted firmly at $305-$315/st FOB Arkansas River shipping points.
California: No market was reported for ammonium nitrate in the state. CAN-17, however, was in very tight supply, with some suppliers out of product until the end of April. A price increase at midweek reportedly took the regional CAN-17 market up to $235-$245/st FOB in Central California, with reference prices as high as $260/st FOB in desert regions of the state.
Pacific Northwest: Ammonium nitrate remained at $327-$335/st DEL in the region, with the upper end in Montana. Sources talked of tight CAN-17 inventories, but no firm prices were reported for that market last week.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was quoted at $220-$225/st FOB in the region, where available. Product was extremely tight and allocated, sources said.
Western Cornbelt: Several sources reported outages of granular ammonium sulfate in the region last week. Where available, the market was quoted at a firm $225/st FOB.
California: Granular ammonium sulfate pricing was up from last report, with the regional market quoted at $210-$220/st FOB and in tight supply. One supplier had reportedly moved its reference price for granular sulfate to a firm $215/st FOB in the state.
Pacific Northwest: Ammonium sulfate was described as “extremely tight” by some sources, who also reported a slight shift from urea to sulfate for topdress movement in some locations. One source faulted higher phosphate prices in part for the limited ammonium sulfate supply, noting that truck shipments were fewer because the economics for backhauls were not as favorable.
Some sources claimed lower grade sulfate was still available for as low as $195-$200/st DEL in parts of the region, but the market for granular ammonium sulfate was generally quoted in the $215-$225/st DEL range, with the upper end reported in Idaho last week.
Western Canada: Granular ammonium sulfate was quoted at $333-$338/mt DEL in the region, up $10/mt from last report. Another increase to $350-$355/mt DEL was reportedly scheduled for April 14 in the region.
PHOSPHATE
Central Florida: Ice, rain, snow, and cold weather blanketed the northern areas of the Midwest and the Northeast, and conditions farther south weren’t much better last week. Even Florida had temperatures considerably cooler than normal, but not cold enough to affect crops. In the most northern areas, weather conditions have prevented farmers from going to the fields and few have begun planting. However, in the southern regions the cold snap last week was devastating to those who had already planted, and crops, especially corn, may have to be replanted. Neither of those scenarios was helpful to the fertilizer industry. In the North, it meant fertilizers, including phosphates, were not moving out of warehouses as was anticipated. In the South, the ground has already been fertilized, and the only likely additional applications from the effects of the weather and replanting will probably be side dressing – but not with phosphates.
“It’s frustrating,” said one trader who deals in the northern climates. “Historically, when that happens, less fertilizer is used, and some fields will go unplanted. That’s a potential problem.”
Sources said the summer fill programs were having mixed results. Mosaic was said to be getting more interest and some orders, but CF’s was not attracting much attention. The terms of the offering were said to be the difference in interest.
At its earnings conference last week, Mosaic said its Wingate Creek Mine was coming back online in June. The company said it cut back on production at its South Pierce facility, although that plant is primarily for external sulfuric acid sales.
New sales out of Central Florida were rare last week, with most of the railcar loadings being under contracts or orders placed some time ago. Nevertheless, that did not stop CF from hiking its DAP price to $390/st FOB, and PotashCorp from jumping its Central Florida reference price another $10/st FOB to $380/st FOB. However, Mosaic’s asking price remained at $370/st FOB, but it has little if anything to sell on a prompt basis. In Texas, Agrifos was earning $430/st FOB for truck loads, which was up about $10/st FOB. The Central Florida DAP price index last week remained at a flat $370/st FOB.
U.S. Gulf: As winter kept a firm grip on the northern areas of the Cornbelt, farmers were not hitting warehouses to scarf up phosphates or other fertilizers last week. Iowa and parts of Illinois were blanketed by snow, and conditions may not improve enough for planting to begin for another week or two.
Last week buyers on the Ohio River were paying a premium to get DAP barges on the water, but those shortages were pretty well filled. Loaded barges were moved into the more northerly locations to be in place when the North opened for business. Unfortunately, the weather did not cooperate, and more barges were said to be moving into the region for the same purpose. If weather conditions had been more favorable, warehouses would have quickly emptied and those with barges in place would have reaped a benefit. However, since that did not happen and other barges were moving in the same direction, it appeared unlikely there would be much of a premium by the time business takes off again in another week or two.
In general, business was slow last week on the river system; shortages of DAP still persisted on the Arkansas River, although most other areas appeared to be fairly well supplied. The next big push will be in the northern areas, but not until winter releases its grip.
DAP prices, which had been moving up quickly, appeared to stall – along with new sales. Some said the summer fill programs offered by producers might be partially responsible. Many who had been on buying binges were doing so to fill their warehouses, but since loading dates on new orders from producers were weeks away, their motivation vanished. If the material was simply going to terminals for later sale, it made little difference whether barges were loaded around the first of May or the first of June.
Since the fill program price was $385/st FOB – or at least $15/st FOB less than the bottom of the current market – buying now and paying interest on the credit for the higher priced material made little sense. Under those conditions, many were deciding to hold off on buying now at $15-$25/st FOB above the fill price and paying the cost of borrowing the money. For them, the fill programs made more sense.
“The phones aren’t ringing and that affects price,” one trader noted. “The summer fill programs (price) will either have to come up or the prompt price will have to come down. If there’s a decent (weather) forecast for Iowa and Illinois, the price will get a bounce.”
A trader said he had sold three NOLA DAP barges, which were to be loaded within a week, at $400/st FOB rather than run them through the warehouse system. Instead, that company was making purchases from terminals, where DAP was priced at $425/st FOB. That difference in price was easily overcome by the cost of freight, throughput, and shrinkage.
Although far fewer NOLA DAP barges were traded last week, buyers said offers were below the previous week, generally from $400/st FOB for barges to be loaded to $405/st FOB for barges on the water.
For actual sales last week, the highest price was paid earlier in the week for a barge on the water – $410/st FOB – and the lowest for barges still to be loaded in New Orleans at $400/st FOB. Last week, the NOLA DAP barge price range was set by that, $400-$410/st FOB, compared to the previous week’s range of $400-$415/st FOB – the first decline in more than a month.
Eastern Cornbelt: DAP and MAP were generally quoted at $425-$435/st FOB regional warehouses. One supplier was offering forward contract DAP for May at $428/st FOB Peoria, Ill., and $431/st FOB Cincinnati. No current prices were reported for TSP in the region. 10-34-0 was quoted in a broad range at $325-$350/st FOB in the region, and in tight supply.
Regarding summer fill programs for DAP at the $385/st FOB Gulf level, one source said “we have a hard time thinking of paying more than $400/st for a laid-in cost for fall business.” He added, “if these prices stay at these levels, we are definitely going to see reductions in usage.”
Western Cornbelt: DAP and MAP were steady at $420-$435/st FOB regional warehouses, with the low reported in Nebraska on a spot basis. Delivered MAP was also quoted at $430-$435/st in central Iowa. Forward contract pricing for May was available from one supplier at $428/st FOB St. Louis, Mo., $431/st FOB Inola, Okla., and $434/st FOB Pine Bend, Minn., for DAP, with MAP listed at $428/st FOB Inola and $431/st FOB Pine Bend.
No market was reported for TSP in the region. 10-34-0 remained in very tight supply, with the regional market pegged at $340-$350/st FOB for available tons.
California: DAP remained at $422-$427/st FOB or DEL, with MAP pegged at $420-425/st FOB or DEL in the state. 10-34-0 was quoted at $269-275/st FOB and in tight supply, and 16-20-0 was pegged at $285-$295/st rail-DEL. Effective April 2, Agrium’s MAP postings moved to $435/st FOB or rail-DEL in California and Arizona, with 16-20-0 referenced at $295/st rail-DEL in those two states.
Super-phosphoric acid remained at $5.70-$5.80/unit DEL, and merchant grade at $5.65-$5.70/unit DEL. A significant increase was tentatively on the books for June from at least one regional supplier.
Pacific Northwest: Phosphoric acid pricing in the region remained firm at $5.70-$5.80/unit DEL for SPA and $5.60-$5.70/unit DEL for MGA. Simplot was scheduled to release new phosphoric acid prices late in the week for the West and Midwest, with an effective date of June 1.
DAP was quoted at $415-$425/st FOB or DEL in most of the region, with MAP at roughly $410-$420/st FOB or DEL. The lower numbers were reported in Montana and Wyoming. TSP, where available, was unchanged at $360-$370/st DEL in Idaho and $380-$400/st DEL in Montana and Wyoming. 16-20-0 was tagged at $280-$285/st DEL in the region, and 10-34-0 was reported at $275-$285/st FOB.
Effective April 2, Agrium’s ammonium phosphate postings moved up in the Western U.S. MAP postings moved on that date to $420/st DEL in Montana and Wyoming; $425/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; and $425/st FOB and $430/st DEL in Washington, northern Idaho, and Oregon excluding Malheur County. 16-20-0 postings from the company moved on April 2 to $285/st FOB in Washington, northern Idaho, and Oregon excluding Malheur County; and $290/st DEL in Montana, Wyoming, Idaho, Oregon, Utah, and Washington.
Upgrades to the J.R. Simplot Co.’s phosphate fertilizer plant near Pocatello, Idaho, during its annual “turnaround” this June should be relatively minor, with no large projects planned, Plant Manager Del Butler said. Simplot plans to hire about 70 seasonal workers to assist on the turnaround. About 340 employees normally work at the plant.
Western Canada: MAP pricing was up significantly from last report, and in tight supply. Sources tagged the regional market as of April 6 at a firm $615-$640/mt DEL, up from the prior $560-$595/mt range in the region.
U.S. Export: PhosChem made no new sales last week. China was not expected to be a major customer of PhosChem during the next several months, as the price of U.S. produced phosphate was well above that country’s domestic price. However, PhosChem pointed out that sales were slim at this time last year, and the situation there may still change. The outlook for India remains relatively bright – at least for the next several years, until the new Saudi phosphate plant goes into production sometime in 2010. That plant would enjoy a freight advantage over U.S. producers.
With no new sales, the export DAP price range was unchanged last week at $435-$436/mt FOB.
Bangladesh: BCIC is tendering for 15,000 mt of phosphate rock to Chittagong. Offers are due through April 26.
POTASH
Eastern Cornbelt: Potash was tagged at $215-$224/st FOB regional warehouses, although higher postings were afoot. One source said new sales would be at the $225-$230/st rail-DEL range to his location, with potash barges quoted at $215-$220/st at the dock.
Agrium’s 60 percent red premium potash postings, for shipments from April 9 forward, include $229/st rail-DEL in Illinois, Indiana, Ohio, Michigan, Wisconsin, and southern Minnesota.; $227/st rail-DEL in northern Minnesota; and $237/st rail-DEL in Alabama, Georgia, Kentucky, Tennessee, Florida, the Carolinas, Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia, and West Virginia. Agrium’s warehouse postings for that shipping period include red premium potash at $221/st FOB Rock Island, Ill., and Mt. Vernon, Ind.; $223/st FOB Danville, Ill.; $224/st FOB Garrett, Ind., Seymour, Ind., Saginaw, Mich., and Toledo, Ohio; and $235/st FOB Mulberry, Fla., and Lewistown, Pa.
Western Cornbelt: Potash was quoted at $210-$222/st FOB regional warehouses, depending on grade and location. A Missouri source pegged the market last week at $215/st for red granular and $218/st FOB for white granular in his area. Agrium’s 60 percent red premium potash postings include $231/st rail-DEL in Iowa, Missouri, and Nebraska for shipments from April 9 forward. Agrium’s warehouse postings for that shipping period include $220/st FOB Shakopee, Minn., and $221/st FOB Dubuque, Iowa, and Kansas City, Mo.
California: Potash remained at $244-$250/st FOB in the state, depending on grade. Potassium nitrate pricing was unchanged at $485/st FOB for bulk and $540/st FOB for bags. Sulfate of potash (SOP) was pegged at $346-$358/st FOB in the state, with rail-DEL SOP quoted at the $350/st mark in the Central Valley.
Pacific Northwest: Regional sources continued to report spotty product shortages, particularly for potash. “This will be the one year where predictions of shortages will actually be true,” said one source.
Rail-delivered potash was quoted in the $247-$260/st range in the region last week, depending on grade and location, with the upper end for 62 percent white granular potash. Out of the warehouse, the market was pegged at $242-$260/st FOB, with the high again for white granular product.
Agrium’s 60 percent red premium potash postings moved on April 9 to $242/st FOB and $247/st rail-DEL in southern Idaho, Utah, and Oregon’s Malheur County; $247/st FOB and $252/st rail-DEL in Washington, the Idaho panhandle, and Oregon excluding Malheur County and the Willamette Valley; and $254/st FOB and $259/st rail-DEL in Oregon’s Willamette Valley.
Western Canada: The potash market remained at a solid $260-$275/mt FOB plant sites or warehouses in the region.
SULFUR
Tampa: Despite the fact that prices for second quarter sulfur contracts began to be settled two weeks ago at $5.50/lt up from the previous quarter, and that both Mosaic and PotashCorp were both signing agreements on those terms, not all of the major sulfur producers have joined in. One – and possibly two – of the majors were holding out for more. Mosaic settled with another of its suppliers last week, and PotashCorp had begun settling its contracts at the $5.50/lt up price. However, not all contracts have been completed, and the Green Markets index will not be changed until the deals are complete.
Earlier projections that sulfur would be in balance or at a surplus by the third quarter appeared to be changing, as sulfur supplies both on the Gulf Coast and in the world market continued to be short. Long term, sure, sulfur will be in abundance, but long term has no effect on the short-term market. Although refineries along the Gulf were coming off turnarounds, less sulfur was being produced. The reason appeared to be an abundance of sweet crude, which is cheaper and easier to use to produce gasoline. Sources said the price difference between the sweet and the sour crude oil had narrowed, making sweet a better deal for the oil companies. Refineries in Montana and Wyoming were conducting turnarounds last week. Projections last week held that sulfur prices for the third quarter may rise again.
Mosaic was said to be short on its sulfur needs and cut back on production at its South Pierce plant, although that facility is used mostly for external sulfuric acid sales. A source said the company had made arrangements to purchase less sulfur for this year than in 2006, and that may be part of the problem.
Mosaic said it has sufficient sulfur to match its consumption needs. It bought less sulfur in 2007 compared to 2006, but that is because it idled phosphate production at both Green Bay and South Pierce. Therefore, it has reduced sulfur needs in 2007.
Vancouver: More bad news from Vancouver: CN railroad workers, who had gone back to work on Feb. 24 after reaching a tentative agreement on a new contract, voted April 10 to reject the deal and went back on strike. Due to an especially cruel winter and delays caused by the earlier work stoppage by CN, Vancouver has already lost about three months of sulfur shipments, which cannot be rescued. The CN strike will aggravate that situation.
On the flip side, however, spot prices for sales into China were up – way up, in the range of $120-$130/lt DEL, and $100/lt or higher into India. Sources said China had stayed out of the market earlier in the expectation that world prices would decline. Instead, they went up, and the Chinese were caught in a pinch and forced to pay more on the spot market to meet their needs. Sulfur supplies in China were said to be near rock bottom. Still, most sulfur was being delivered to the world market on existing contracts, which were considerably lower than the current spot market.
At least three refineries in Canada were beginning turnarounds last week, which was probably not a bad idea considering the CN rail strike.
MARKET NOTES
Houston: Jacobs Engineering Group Inc. reports that it has received two major engineering, procurement, and fabrication packages from BP Products North America Inc. for its planned $3 billion Canadian Heavy Crude Refinery Upgrade program in Whiting, Ind. The work for one package includes licensing, design, and fabrication of Sulfur Recovery Facilities. For this effort, Jacobs expands the services provided to BP from traditional engineering and procurement to technology licensing through Jacobs Comprimo Sulfur Solutions(R) in Leiden, the Netherlands, and modular fabrication through their facility in Charleston, S.C. The project scope for the second package includes the revamp of several hydroprocessing units.
Pakistan: Fauji Fertilizer Co. Ltd. (FFC) is implementing de-bottlenecking of its existing plant III (situated at Mirpur Mathelo), to add from 60,000 to 75,000 mt to its total urea capacity by the end of 2007. Unit 3 Mirpur Mathelo contributes 574,000 mt, representing 30 percent to the capacity. Estimated cost of the project amounts to somewhere around Rs2bn. With the completion of this expansion, total capacity of the company would increase to 1.96 million mt.
Richmond, Va.-The Virginia General Assembly will be making a minor change before Gov. Tim Kaine signs, in the next few days, a set of bills to shift regulation of biosolids use as a fertilizer to the Department of Environmental Quality (DEQ), according to industry officials who support the move. “The end result will be that the biosolids permitting program in Virginia will move from the Department of Health to DEQ,” Katie Kyger Frazier, assistant vice president-public affairs for the Virginia Agri-Business Council, advised Green Markets. “The council believes that regulations and permits for the land application of biosolids on farm and forestland should be state-wide and science-based. As such, we are hopeful that with adequate resources devoted to this move to DEQ, the program will continue to gain public confidence, as well as continuing to provide our farmers and foresters with a valuable source of nutrients that biosolids provides.” Other biosolids legislation that raised agriculture concerns by giving greater local control over decisions of land application sites and normal farm storage sites was defeated in a House Agriculture Subcommittee early in the session, Frazier reported. Currently, the responsibility for regulation of the land application of biosolids is split between DEQ and Health, and under the new system DEQ will be required to conduct unannounced site inspections while biosolids are being applied. A fee of $7.50 is assessed on each dry ton applied in the state. With the governor’s signature the changes become effective next Jan. 1, provided that adequate funds have been authorized.
Washington, D.C.-Rep. Ron Lewis (R-Ky.) on March 29 introduced the House version of the Agricultural Business Security Tax Credit Act (HR.1814), which would help eligible agricultural businesses to partially offset security costs by providing a tax credit equivalent to 30 percent of the total amount paid on implementing qualified security measures. The legislation provides for up to $100,000 in security tax credits per facility, with an overall company cap of $2 million per year. “Agricultural retailers and distributors face onerous security regulations daily, which adds to the costs of doing business,” said Jack Eberspacher, president and CEO of the Agricultural Retailers Association, which helped initiate the bill. “In addition, our members are being adversely impacted by high fuel, fertilizer and transportation costs, requiring significant amounts of working capital. This legislation helps the ag retail and distribution industry to protect pesticides and fertilizers from the threat of theft by terrorists, drug dealers and other criminals.” ARA said it is working the Chemical Producers and Distributors Association, CropLife America, The Fertilizer Institute, the National Agricultural Aviation Association, and the Agricultural Food and Transporters Conference of the American Trucking Associations to secure the bill’s passage.
Minneapolis-The U.S. District Court recently sentenced Allan Talmadge Weatherford, 45, to ten years in federal custody for threatening to blow up the Rice County Courthouse. In addition to a large arsenal of firearms, two propane tanks containing fertilizer and petroleum were found on Weatherford’s farm, though lab analysis indicated the mixture was not of the quality to produce an explosive. Weatherford had admitted his intention to make a fertilizer-based bomb.
Fond du Lac, Wisc.-Thousands of gallons of liquid nitrogen were spread over the highway April 10 in a bizarre collision of three semi-trucks at an intersection near here that killed two drivers and left investigators puzzling over why it happened in the first place. The Fond du Lac Sheriff’s office has figured out that the tanker, with approximately 3,000 gallons of fertilizer, stopped to allow a semi in the opposite direction to pass before turning off the highway. An oncoming empty flatbed rear-ended the fertilizer tanker, pushing it into the opposite lane, where it was struck by the other semi loaded with paper products. The fertilizer tanker driver was treated and released from a nearby hospital, but the other two died later of injuries. The sheriff’s spokesman, Sgt. Ryan Waldschmidt, reported in a news release that the Fond du Lac HAZMAT team was hampered by hazardous conditions caused by the mixture of nitrogen, oil, diesel fuel, and antifreeze, which slowed removal of the drivers and caused evacuation of three area residents. At one point it was feared the oil and fertilizer could cause an explosion. Highway traffic was rerouted around the accident scene from afternoon until early the next morning.
Washington, D.C.-Indications that EPA will be exempting manure used as a fertilizer from Superfund laws were greeted as welcome news in agriculture circles, but concerns were raised in at least one state, and The Daily Iowan editorialized that the changes would let farmers off without accounting for certain types of pollution. Last month the agency said it plans to exempt large livestock farms from the requirement of reporting emissions of ammonia and various other air pollutants, and also specified that manure not be considered hazardous waste if “used properly as a fertilizer.” Jon Scholl, the agency’s agriculture adviser, indicated at a livestock industry meeting that the changes could be finalized by fall 2008, shortly before President Bush leaves office. The New York Farm Bureau told Green Markets it would applaud the move. Bob Hokanson, assistant director for public policy, said he was pleased the agency is recognizing there’s no need to have manure regulated under the Superfund guidelines because there are sufficient provisions in the Clean Water and Clear Air Act to maintain the quality of the waterways. Jeff Lyon, director of government relations with the Wisconsin Farm Bureau, didn’t know if the EPA rule-making would derail efforts to get legislation passed in Congress to exempt manure. He offered that the two-pronged approach may still be the way to go, noting that letters have gone out to get the entire Wisconsin delegation in the House to co-sponsor HR1398, which already has 85 signed on. There are 17 co-sponsors for the Senate companion bill S.807. Ericka McPherson, Oklahoma Farm Bureau director of national affairs, cautioned that what EPA has in mind still needs clarification. “We are concerned about how EPA officials are going to define ‘used properly as a fertilizer.'” McPherson said if they mean “agronomic rate,” that could be a concern, because that’s a main issue in the Oklahoma attorney general’s litter contamination suit against poultry companies.
Canadian National Railway’s 2,800 union conductors and yard workers voted overwhelmingly on April 10 to reject a tentative one-year contract with the railroad, and returned to the picket lines on Wednesday in what the union termed would be a “rolling strike” across the CN system.
A United Transportation Union spokesman said 79.4 percent of the 2,317 union members who cast ballots voted to reject the tentative agreement with CN, which was negotiated on Feb. 24 between UTU leaders and CN officials after a walkout that began on Feb. 10 (GM March 5, p. 1).
The agreement had specified a 3 percent wage increase and a $1,000 signing bonus, but an April 10 press release from UTU Vice President John Armstrong said the union members “want a better deal at CN ?Çô one that deals with dignity and so-called ‘relationship’ issues.” Picketers in Vancouver on Wednesday carried signs that read, “UTU on strike against CN for respect, dignity and safety.”
The union had originally asked for a 4.5 percent wage increase in the first two years of a three-year contract, with a 4 percent increase in the final year. The “relationship” issues at question, reportedly involving CN policies regarding lunch breaks, disciplinary actions, and employee surveillance, were cited by some insiders as a primary reason for the contract rejection.
The resumed walkout prompted a new round of statements from Canadian businesses, including the fertilizer industry, which were heavily impacted by the February strike action because of costly shipping delays.
“Ending the strike is critical to avoid crippling the movement of fertilizer throughout rural Canada as well as to export markets,” said the Canadian Fertilizer Institute in an April 11 statement. “The Canadian fertilizer industry faces an annual logistical challenge of moving 25 million tonnes of product. At this critical time, rail service disruptions may cause significant losses and layoffs throughout both the farming and farm supply industries.” Added CFI President Roger Larson, “The spring season will be quickly upon us, and the next four to six weeks will determine the success or failure of farmers’ crops this year.”
CN said it would try to keep systems up and running by using management to fill in for the striking workers, just as it did during the first walkout. The railroad cautioned, however, that “service levels may be affected by the frequency, location and severity of the UTU’s rotating work actions.”
Rhonda Speiss, public relations manager for Potash Corp. of Saskatchewan Inc., told Green Markets that the company was “in daily contact with CN to prioritize the movement of our products out of Saskatchewan.” She said CN “has advised that they’ll do their best during the strike,” but noted that it is “too early to tell what the impact will be on shipments. We’re certainly hopeful that the situation will be resolved quickly.”
“It’s definitely been a ‘two martini’ kind of day with the CN announcement,” another industry source told Green Markets on Wednesday. “Although they are saying it is a ‘rolling strike’, I remain dubious about the ability of CN management to effectively maintain service if it becomes a protracted situation. We have some proactive plans in place to move U.S. plants currently being sourced off the CN to other supply bases as may be necessary.”
UTU conductors and rail yard workers had been back to work at CN since the Feb. 24 agreement was reached, but the union had officially remained on strike pending approval of the contract. Labor Minister Jean-Pierre Blackburn had introduced back-to-work legislation in Ottawa on Feb. 23 that was a key factor in bringing the two sides together. On March 29, Blackburn promised federal intervention again if the strike were to resume, and reiterated that promise on April 11 while acknowledging that a “negotiated settlement is always preferable to legislation.” In its April 10 press release, UTU Vice President Bob Sharpe asked the Canadian government not to interfere while negotiations commenced between the union and CN.
CFI on April 11, however, urged the Canadian government to “act quickly to enact back-to-work legislation,” and that sentiment was echoed by other impacted industries. “We are calling for the government to move quickly to impose a dispute resolution process combined with immediate back-to-work legislation for CN railway workers,” said Richard Phillips, executive director of the Grain Growers of Canada. “Not only will a strike once again shake our customers’ confidence in our ability to supply grain at export position, but a shortage of fertilizer could cripple Canadian farmers at seeding time.”
“We do expect the government to not allow this to go on,” said Richard Downey of Agrium Inc. “It is going into the middle of the season, and this has the potential to significantly impact Canadian farmers in terms of crop inputs.” Downey told Green Markets that lawmakers were in recess last week in Ottawa, but have back-to-work legislation “ready to go” and will not tolerate “putting the Canadian farmer at that kind of risk.” Downey added that he expects the government to act quickly. “We anticipate there would be sufficient support within the Canadian government to do that,” he said.
In an April 12 statement, trade groups representing more than 20 producers and shippers of sulfur in Western Canada also called on “all federal parties to protect jobs, health and safety and the environment, by immediately passing legislation that will bring a speedy end to the current CN rail labour disruptions.”
UTU Spokesman Frank Wilner was quoted as saying the union was “prepared to return to [the] bargaining table to negotiate a better agreement acceptable to the membership, and until we gain such an agreement, we’ll continue with rotating strikes across the CN system.” Mark Hallman, CN’s director of communications, said the railroad is also willing to continue talks with the union.
Late on Wednesday, however, CN had reportedly locked out about 280 workers in five Canadian cities who had originally intended only to remain off the job for a few hours. UTU officials blamed CN for “effectively escalating the level of disruption” by that action, but CN officials said the lockouts were necessary to maintain the railroad’s operating schedules. “We have to have a predictable source of manpower resources,” a CN official was quoted as saying.
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.
