All Posts from August 16, 2019

Muriate of Potash

California, China, Eastern Cornbelt, India, Market Watch, Pacific N.W., Potash, Sri Lanka, U.S. Gulf, Western Canada, Western Cornbelt

U.S. Gulf:

NOLA prompt barges edged down a bit to $243-$250/st FOB from the week-ago $245-$250/st FOB.

Eastern Cornbelt:

Potash was tagged at $280-$285/st FOB Illinois and Ohio River terminals at the low end of the regional range, with the upper end reflecting reference pricing from Canadian producers at the $315/st FOB level.

Western Cornbelt:

The potash market was unchanged at $280-$315/st FOB in the Western Cornbelt, with the low reported at St. Louis and the upper end reflecting current producer postings.

California:

Sources quoted the potash market at $425-$435/st FOB and $430-$440/st DEL in California, down some $20/st from spring pricing levels, with the low for 60 percent and the high for 62 percent MOP. The new prices reflect a $25/st increase from some limited fill tons offered in July at the $400-$410/st FOB level, sources said.

Pacific Northwest:

Potash pricing in the Pacific Northwest was quoted at $390-$400/st FOB or DEL, although sources said fill tons were offered briefly in July at the $365-$375/st level. New potash postings from Intrepid at Moab and Wendover, Utah, were down $20/st, to $335/st FOB for 60 percent granular and $330/st FOB for 60 percent standard.

Western Canada:

Potash pricing to Western Canada buyers was steady at C$420-$425/mt FOB Saskatchewan mines for new business.

China/India:

K+S this week reported being “more cautious” on its outlook for short-term shipments for potash due to the upcoming seaborne import stoppage by big Chinese importers (reportedly “until new annual contracts are settled”) amid plentiful port inventories and slow demand in the country.

But K+S Chairman Burkhard Lohr, in an earnings call on Aug. 15, emphasized his belief that the stoppage will be a temporary situation, and like some other industry participants, he is optimistic about China’s 2020 potash demand. He reminded of a prior potash import halt by China – about four years ago – which lasted a maximum of four months, and he expects it to be a similar situation with the current stoppage.

Responding to an analyst’s question, Lohr speculated that the import halt may have an impact on the new contract price, but would not state whether he was expecting the new price to be settled at a lower level than last year’s $290/mt CFR. He did concede that he did not expect to see a new contract settled in China soon.

In contrast, in India, Lohr expects to see the new contract price to be settled soon, despite the country’s sufficient potash stocks. Amid an environment of softening global potash pricing, sources report that Indian buyers are looking for at least a rollover on the new contract price, if not a decrease from last year’s $290/mt CFR with 180 days’ credit.

Sri Lanka:

The government bought 20,000 mt of MOP for Ceylon Fertilizers and Colombo Commercial Fertilizers. Reportedly, the price came in at $343.10/mt CFR from Swiss Singapore.

The order included 30,000 mt of urea provided by Liven at $315.80/mt CFR.

Belarus Potash Co. – Management Brief

Belarus, Management Briefs, Potash

Belarus Potash Co. (BPC) this week announced that Andrei Chushev, formerly Director of the company’s Malaysia Representative Office in Kuala Lumpur, has been appointed Deputy Head of BPC’s Sales Department, and will be based in the company’s head office in Minsk.

Vyacheslav Lyashkov, previously Director of BPC’s New Delhi Representative Office, also returns to the head office to coordinate sales in Latin American countries.

BPC’s New Delhi Representative Office is now headed by Aliaksandr Samakhval, a former Sales Manager of the New Delhi office.

Mikhail Marynich has been appointed as the new Director of BPC’s Malaysia Representative Office. He previously was responsible for the promotion and sales of Belarusian potash in European countries.

 

United Services Association – Management Brief

Management Briefs

United Services Association (USA), Urbandale, Iowa, said on Aug. 9 its Board of Directors has selected Matthew Paul as its new CEO and President, effective Aug. 30, 2019. As previously announced, Mark Morrissey will be retiring from his role as CEO (GM April 26, p. 24) and will stay on in an advisory role until the end of the calendar year.

Paul comes to USA with many years of experience in the ag sector with John Deere and Dow Dupont. Most recently, he has been busy with his consulting company, MP Consulting Solutions, where he has been helping small- to mid-sized companies grow profitably and plan for their future.

Paul has bachelors and master’s degrees in accounting from the University of Iowa. USA said his educational background and work experiences in team leadership, strategic planning, and business development will be of great value in helping the company continue to grow and be successful.

Reporting to Paul will be Frank Edwards, Vice President of Crop Nutrient Procurement, Jodi Anania, Director of Risk Management, Ron Staab, Director of Accounting Services and Controller, and Mike Meether, COO of NAS LLC.

Additionally, USA announced the retirement of Edwards, effective Nov. 8. USA said he joined the company in 2012 and has been a valuable leader in the procurement services for its members. Prior to USA, he spent several years in the crop nutrient sector with the regional cooperative systems.

Paul, with the assistance of Morrissey, will immediately begin a search to fill the Vice President of Procurement role.

The Fertilizer Institute – Management Brief

Management Briefs

The Fertilizer Institute on Aug. 6 announced the selection of John D. Jones as the Director of the Foundation for Agronomic Research. Jones will provide oversight of the 4R Research Fund, coordinate a 4R Researcher network, and support other strategies to advance 4R nutrient stewardship.

Jones is a winner of the 2019 American Society of Agronomy Future Leaders in Science Award from the Tri-societies and a recipient of the 2018 Robert A. Sloan Award in Sustainable Agriculture from Iowa State University (ISU). TFI said he has extensive agricultural retail experience organizing and leading on-farm research grower networks and implementing progressive agronomic practices that highlight profitability and input efficiency. Jones holds a Bachelor’s degree in Agronomy and Environmental Science from Kansas State University and a Masters’ Degree in Soil Science-Soil Fertility from ISU. He is currently finishing his PhD in Soil Fertility and Sustainable Agriculture at ISU.

“John Jones brings a unique breadth of experience to the Foundation for Agronomic Research,” said TFI Vice President of Stewardship and Sustainability Lara Moody. “Having served as the primary agronomic advisor for a yield contest winning soybean farmer in Kansas to conducting instrumental research for understanding soil and phosphorus loss in Iowa and advocating for science policy that supports agricultural research on the local, state, and national level, John is uniquely-qualified to lead FAR.”

The 4R Research Fund, which is supported by the fertilizer industry and other stakeholders, recently awarded nearly $2.7 million to five research efforts in California, Arizona, Utah, Arkansas, and the South (Virginia, Georgia, Tennessee, and Texas) to projects focused on almonds, vegetables, tart cherries, potatoes, wheat, corn and corn silage, alfalfa, cotton, rice, and soybeans. Those funds were leveraged with $3.2 million from multiple stakeholders to total $5.9 million in research.

CommoditAg™ – Management Brief

Management Briefs

CommoditAg™, the e-commerce crop inputs platform that launched in late 2017 (GM Jan. 5, 2018), announced on Aug. 13 that it has named John Demerly as its new CEO. Demerly joins CommoditAg from Corteva AgriSciences and has worked in the ag industry for 22 years, with leadership roles at Corteva, Adayana Agribusiness Group, and the FFA in Indiana. He also served on the board of directors for the Agricultural Retailers Association and Purdue University College of Agriculture Dean’s Advisory Council.

“We are extremely pleased to have attracted someone with John’s talents and experience to lead the organization as we continue to build-out a national and eventual global marketplace,” said Bruce Vernon, former CommoditAg CEO and current Board Chairman. “CommoditAg’s growth requires a skilled leader such as John to fulfill our vision of being the farmer’s choice for e-commerce input needs and market access for suppliers through our network of carefully selected participants with fulfillment capabilities.”

CommoditAg currently has nine partner retailers across Kansas, Arkansas, Missouri, Iowa, Minnesota, Illinois, Indiana, and Ohio. “CommoditAg’s unique business model proactively brings progressive ag retailers and e-commerce together, providing farmers the opportunity of choice and the ability to purchase agricultural inputs through different channels to fit their individual needs,” Demerly said. “I look forward to leading the growth of the organization while expanding our market footprint and broader choice for farmers.”

FMCSA Proposes Changes for HOS Rules; ARA Voices Support

News, News Briefs

The U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) on Aug. 14 published a series of proposed reforms to the hours of service (HOS) requirements for commercial truck drivers, which the agency said will “provide greater flexibility for drivers subject to the HOS rules without adversely affecting safety.”

The proposal lists five key changes. First, FMCSA proposes to change the short-haul exception to the record off-duty status (RODS) requirement available to certain commercial motor vehicle (CMV) drivers by lengthening the drivers’ maximum on-duty period from 12 to 14 hours and extending the distance limit within which the driver may operate from 100 air miles (115.08 statute miles) to 150 air miles (172.6 statute miles).

Second, the agency proposes to modify the adverse driving conditions exception by extending by two hours the maximum window during which driving is permitted. Third, the Agency proposes to increase flexibility for the 30-minute break rule by requiring a break after eight hours of driving time (instead of on-duty time), and allowing the requirement to be satisfied by an on-duty break from driving rather than requiring an off-duty break.

Fourth, the agency proposes to modify the sleeper-berth exception to allow drivers to split their required 10 hours off-duty into two periods – one period of at least seven consecutive hours in the sleeper berth and the other period of not less than two consecutive hours, either off-duty or in the sleeper berth. Neither period would count against the driver’s 14-hour driving window.

Fifth, FMCSA proposes to allow one off-duty break of at least 30 minutes, but not more than three hours, that would pause a truck driver’s 14-hour driving window, provided the driver takes 10 consecutive hours off-duty at the end of the work shift.

“The proposed rule would not result in any new costs for regulated entities,” FMCSA said. “Instead, the proposed rule would result in increased flexibility for drivers and a quantified reduction in costs for motor carriers.” FMCSA cited estimates that the HOS changes will save American consumers and the U.S. economy an estimated $274 million while improving safety.

The Agricultural Retailers Association (ARA) issued a statement in support of the changes. “These reforms, including the short haul exemption expansion for CDL drivers to 150 air miles and the expansion of duty hours from 12 to 14 hours, will provide necessary flexibility for ARA members to meet the needs of their customers without adversely impacting transportation safety,” said ARA Senior Vice President of Public Policy and Counsel Richard Gupton.

A 45-day public comment period is now in effect, and FMCSA is encouraging stakeholder to review and comment on the proposal.

AGI Reports 2Q Results

Canada, News, News Briefs

Winnipeg-based equipment supplier Ag Growth International (AGI) reported second-quarter adjusted profit of C$20.2 million on trade sales of $293 million, compared to the year-ago $22.3 million and $262.6 million, respectively. Adjusted EBITDA was up at $51.3 million from the year-ago $49.2 million. The company said profits decreased largely due to transitory items related to the acquisition of India-based Milltec.

Adjusted EBITDA, while up, was impacted by anticipated low sales volumes in Brazil, a seasonally low sales volume quarter in India, and the impact of challenging weather on grain storage system sales in the U.S. Despite the weather, the company noted that trade sales increased due to good demand for portable farm equipment, as well as recent acquisitions in India and France.

While noting that U.S. farmers are cautious regarding spending due to the recent weather issues, the company expects a significant increase in corn planted acres in 2020.

Six-month adjusted profit was $25.2 million on trade sales of $509.2 million, down from the year-ago $33.7 million and $476.7 million. Adjusted EBITDA was up, at $82 million from $79.9 million.

TFI Launches Digital Campaign on Algal Blooms

News, News Briefs

The Fertilizer Institute (TFI) on Aug. 12 kicked off a campaign aimed at raising awareness with the general public about algal blooms, red tides, and dead zones, and educating them on how the fertilizer industry is actively working to find a solution. TFI said a key element of the campaign is the 4R Nutrient Stewardship program, which it said has been identified by multiple conservation and environmental stakeholders as vital to reducing fertilizer loss from the farm.

“We feel as though we have an extremely compelling story to tell,” said TFI President and CEO Chris Jahn. “People don’t know the many different fertilizer products that are used at different times and places for different purposes, and we won’t get into that, but what we will address are the best practices the fertilizer industry has been promoting for years to both increase farmer productivity and lessen our environmental impact.”

TFI said conservation management practices like the 4Rs and other measures have had a major impact on fertilizer usage over the years, noting that it takes roughly half of the amount of fertilizer to grow a bushel of corn today as it did in 1980. It said fertilizer use in the state of Florida alone has dropped by 50 percent over the same time period.

“If you are a farmer implementing the 4Rs, it helps ensure that you are only using the amount of fertilizer the plants need where and when they need it,” Jahn said. “That in turn keeps fertilizer on the field and out of waterways where it may feed naturally occurring algal blooms.”

TFI said its campaign will run through the late summer months into early fall and focus on Florida, Iowa, coastal areas around the Gulf of Mexico, the Chesapeake Bay watershed, and areas surrounding Lake Erie.

 

Gensource Inks Financing LOI

News, News Briefs, Potash, Saskatchewan

Junior miner Gensource Potash Corp., Saskatoon, on Aug. 12 announced that it has reached a significant milestone in the financing of its initial small-scale project at its wholly-owned Vanguard area in Saskatchewan. Specifically, it said it has received Letters of Intent from KfW IPEX-Bank of Germany and Export Development Canada (EDC). It said both are currently evaluating how they can support the project by providing senior debt. Gensource said it is also in discussions with a major global bank that may be engaged to round out the club.

“We are excited to have reached this important milestone that our shareholders have been anticipating,” said Mike Ferguson, Gensource President and CEO. “As anyone who has been involved in bringing a major project to completion knows, there are a series of critical hurdles or milestones that must be attained. Obtaining debt financing – an indication by third party capital 2 providers that the project is not only viable, but also attractive – is among the most important. We are gratified to have attracted major, globally-recognized, and experienced lenders to the Gensource team for this project.

“Together with KfW IPEX-Bank and EDC, both world-class institutions in the resource industry, we now want to take the next steps,” he added. “Today’s announcement, together with the May 22nd news release announcing the creation of the project through commitments from the offtaker and a third-party equity investor (GM May 24, p. 1), makes it plain that the project is on a clear path to financing.

“The selected institutions bring extensive experience in structured mining finance in Canada and internationally. Their support gives us strong confidence in our ability to advance the project to a successful financing and confirms the attractiveness of Gensource’s small-scale, modular approach to potash mining,” said Ferguson.

Gensource said KfW IPEX-Bank is planning to assume a role as the arranger of the senior debt financing, and will work with EDC and other senior lenders to conduct customary due diligence and possibly utilize official export promotion schemes as credit enhancement. As is customary, final, definitive, terms have not yet been agreed upon, and the financing remains conditional upon the successful completion of the detailed due diligence process.

On completion of the due diligence process, an agreed term sheet will be submitted for senior lender’s formal credit approval. Following this, Gensource and the senior lenders will prepare and execute definitive facility and security documentation. Gensource is working with Roc Global LLC of New York as its exclusive financial advisor.

Argentine Peso Falls Sharply; Reduces Country’s Purchasing Power, Sparks Inflation Fears

Argentina, Featured, News, News Briefs

Argentina’s peso tumbled for the third day since PASO, or primary elections, against the U.S. dollar, to 59.4 pesos per dollar. The peso declined 31 percent against the dollar in three days, as of Aug. 14.  President Mauricio Macri said he would freeze fuel prices for 90 days and increase the country’s minimum wage as he seeks to mitigate the inflationary impact of this week’s peso devaluation.

Left-wing candidate Alberto Fernández bested the fiscally conservative incumbent Macri in the primary by more than 15 points, winning more than 47 percent of the vote, noted Bloomberg. The primary is meant to winnow the slate of candidates, but in reality it serves as a nationwide poll to preview the official vote for the presidency, still 10 weeks away. Macri will stay in the race, but investors and pundits consider his deficit in support too vast to make up.

“We have this long transition where it looks like Alberto Fernández is going to be the president, but he still has to be elected,” Daniel Kerner, Eurasia Group Managing Director for Latin America, told Bloomberg. “With the market tanking and the government not knowing how to manage it – and actually playing on this fear – we are entering a very, very delicate situation in Argentina for the next several months.”

Macri could still force a runoff if he manages to claw back enough support from the front-runner and other lower-tier candidates before the official election on Oct. 27 to bring himself within 10 points of Fernández. As long as Fernández also receives less than 45 percent of the vote, there would be a runoff on Nov. 24, giving Macri more time to spin his comeback narrative. Should Fernandez ultimately win, he would take office on Dec. 10.

Argentine farmers had resorted to sitting on their soy harvests as a hedge against election-induced volatility in 2019. The share of soy output traded by farmers is currently the lowest since at least 2014. Farmers sold and priced 22.6 million mt of soy crop through July 31, according to government data. That is 41 percent of the harvest, compared with 53 percent at the same stage last year.

 

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Source: Bloomberg, Green Markets

President Marci implemented free-market reforms in 2015 by eliminating and/or removing export taxes on soybeans, corn, wheat, and beef through macroeconomic stabilization, deregulation, and market-orientated policies. Area planted to corn, soybeans, and wheat in Argentina rose to 29.9 million hectare in 2019, up 10 percent from 2015 (pre-reform policy).  Urea, phosphate, and potash demand has risen to support the additional acreage.

Argentine fertilizer year-to-date (Jan.-June) imports are 167.5k DAP (up 130 percent), 192k urea (up 236 percent), 21k MOP (down 9 percent), and 76.5k UAN (down 45 percent) compared to the same stage last year, according to Trade Data Monitor. Year-to-date Argentina UAN imports are at their lowest levels since 2014. Russian UAN exports to Argentina are down 32 percent in 2019, while U.S. UAN exports to Argentina are up 66 percent to date.

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Source: Trade Data Monitor, Green Markets

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