All Posts from September 16, 2013

Urea

Bangladesh, Black Sea, California, China, Eastern Cornbelt, India, Indonesia, Market Watch, Middle East, Pacific N.W., U.S. Gulf, Urea, Western Canada, Western Cornbelt

U.S. Gulf: Granular barge prices spanned a broader range last week as they moved up. Sources attributed the uptick to concerns about getting barges to their locations before upriver closings. Some, remembering last fall, noted lower water levels upriver, and feared those could become an issue once again.

Prices were reported to have started off as low as $280-$281/st FOB before moving up to $294-$296/st FOB by the end of the week.

Despite the uptick, market bears said that once this flurry of prompt barges beats the river close, buyers will lose their incentive to pay a premium. They also argue that there are enough imports on the way, particularly from China, to continue to pressure the market. They expect a retreat in pricing for October and November barges.

Prills were weaker last week, and were called $315-$325/st FOB. Sources said lower numbers may be on the horizon as competition has been gearing up. As a result, new trades may edge closer to granular.

Eastern Cornbelt: Granular urea pricing in the Eastern Cornbelt remained soft at $325-$345/st FOB regional terminals, but sources reported little in the way of new business to test the market.

Western Cornbelt: The granular urea market continued to be quoted in the $325-$345/st FOB range in the Western Cornbelt, with the low in St. Louis and the higher numbers in Iowa on a spot basis. One Missouri contact pegged the dealer market at the $335/st FOB level in his trade area last week.

The Tulsa, Okla., urea market had reportedly slipped to $330/st FOB on the low end.

California: The granular urea market remained at $420-$440/st FOB in California, with delivered prices referenced in the $475-$510/st range before discounts, depending on location.

Pacific Northwest: Granular urea pricing had slipped to $380-$400/st FOB in the Pacific Northwest, down $20/st from last report. Delivered urea was also down, with sources quoting the dealer market consistently at $400-$415/st DEL in the region, depending on location.

Western Canada: Granular urea was quoted at $505-$510/mt DEL in Manitoba, $510-$515/mt DEL in Saskatchewan, and $515-$530/mt DEL in Alberta and British Columbia, but sources reported no business at that or any level.

One regional source speculated the prices would have to drop to the mid-$400s/mt DEL to attract any new sales.

Middle East: Sorfert in Algeria sold its first cargo at a price sources say might indicate a rebound in the urea market. The winning bid came in at $320/mt FOB, presumably with Europe as its final destination.

At first sources wondered why anyone would pay so much when Egypt closed at $285/mt FOB the previous week. The answer came in a second Egyptian sale at $315/mt FOB.

While few are ready to say that the market has definitely found its floor, many were happy to see stronger prices pop up in both a newcomer to the market – Algeria – and an established supplier like Egypt.

Even though Oman closed a deal at $280/mt FOB in the Japan-aid tender for Pakistan, Arab producers continue to claim the market is really in the low $300s/mt FOB.

One trader noted that the producers are always ready to claim a higher price when they sell to a small, high-risk location such as Sudan. They are less likely, however, to acknowledge when odd deals plunge the price.

Sources say the deal by Oman and the sales to Thailand all point to prices in the $280s/mt FOB. However, there is a consensus that the low-$300/mt FOB prices paid by other buyers should be included. One trader noted that the price consideration does not include the contracted tons, which are estimated to be in the upper $280s/mt FOB at this time.

Prilled urea is pegged at $280-

The McGregor Company opens new retail/distribution site in Washington

Aqua Ammonia, News

The McGregor Company has opened a new fertilizer retail distribution facility in Creston, Wash., that will provide growers in Washington’s Big Bend area with anhydrous and aqua ammonia, UAN, ammonium thiosulfate, and ammonium poly phosphate.

The site was formerly a biodiesel production facility, which operated from 2004 until June 2011. McGregor, headquartered in Colfax, Wash., purchased the location in April 2012, and began a $2 million, 17-month construction project to rehabilitate the site and completely remodel the structure, which had fallen into disrepair since its closure.

That process included cleaning and renovating the former biodiesel manufacturing building and office; removing all contaminated soil and byproducts; building new infrastructure; adding fertilizer storage and containment, as well as rail unloading capability; and adding manufacturing capability for aqua ammonia and ammonium poly phosphate.

McGregor told Green Markets that it was “a very long process, but the end result has turned out to be a state-of-the-art retail facility.”

“Our new retail location at Creston is a strategic manufacturing, storage, and distribution facility that will serve growers within a 70 mile radius of the facility,” said Fred Morscheck, McGregor’s general manager, marketing and logistics. “This location will provide us with the ability to bring fertilizer closer to the market by rail, and serve our current and future customers in a more timely and reliable manner.”

The new 6,000 square-foot facility consists of one building that houses the fertilizer manufacturing and storage capabilities and the retail office. A staff of six operates the Creston location, three of whom are new hires since the project started. McGregor said the location will handle only fertilizer products at this time.

The primary market that the Creston location serves is Washington’s Lincoln County. McGregor currently operates two other branches in Lincoln County, located in Davenport and Harrington, as well as other nearby branches in Lind and Ritzville, located in neighboring Adams County.

The Creston location will be serviced by Eastern Washington Gateway Railroad, a state-owned rail line that connects with the BNSF at Cheney, Wash.

“Determining when and where to build out our infrastructure has been a work in progress at McGregor, and we are very pleased to have our new facility at Creston open for business this month,” Morscheck told Green Markets.

The McGregor Company’s agronomy business employs seven separate teams that operate from approximately 36 locations throughout Washington, Idaho, and Oregon. In addition to agronomy, the company has seed, seed treatment, equipment, and research and technology divisions, as well as extensive custom spray, transportation, and risk management services.

Uralkali 1H profits drop 53 percent, blames lost market share; industry closely watches Belarus/Uralkali dispute

Featured, News

OAO Uralkali reported a 53 percent drop in profits for the first half ending June 30, 2013, to US$397 million, down from the year-ago $842 million. Revenues were down 28 percent, to $1.61 billion from $2.23 billion.

In releasing its results, Uralkali shed some light on its reasoning for its July 30 exit of its “price over volumes” marketing arrangement with Belarusian Potash Co. (BPC) in favor of a “volumes over price” stance. Uralkali reported that its first-half market share dropped to 17 percent from the year-ago 22 percent. It estimated that Belaruskali’s dropped to 17 percent from 19 percent, while all of the other major potash producers saw market share increases – PotashCorp/Canpotex Ltd. to 32 percent from 27 percent, SQM to 4 percent from 3 percent, and the combination of K+S Group/Israel Chemicals Ltd. (ICL) and Arab Potash Co. to 30 percent from 29 percent.

Uralkali said it lost market share in several markets, and particularly noted Brazil and Southeast Asia.

Uralkali first-half exports were off 20 percent, to 3.3 million mt from the year-ago 4.1 million mt. However, while there was only a minor drop in the first quarter, exports were off 28 percent in the second quarter, to 1.8 million mt from 2.5 million mt. Overall, first-half volumes were off 17 percent, with domestic volumes remaining stable at 1 million mt.

First-half export prices were off 17 percent, to $316/mt FCA versus the year-ago $380/mt FCA. Domestic prices were more stable at $257/mt down from $270/mt.

Uralkali said that during the first half it operated at about 70 percent of capacity. However, it said after its July 30 announcement that it has revved up production to produce at its full out 13 million mt/y rate. As a result, it now sees 2013 production at 10.5 million mt, versus 2012’s 9.4 million. It is planning on a full 13 million mt in 2014, and expects to stair-step up capacity via upgrades to 15 million mt by 2020. In 2015, it expects to make a decision whether to move forward for another 4.2 million mt, to 19.2 million mt. In addition to its capacity, it noted its logistical advantages, such as its rail route to China.

In addition to its capacity prowess, it touted its unit cash costs, saying those dropped to $58/mt in the first half versus the year-ago $60/mt. Uralkali said that the benefits of being the capacity and cost market leader have been eroded in the face of aggressive behavior by competitors. It cited erratic pricing decisions by competitors in a market where demand has been lower than expected despite high crop prices and favorable farmer economics.

Uralkali last week tried to downplay earlier comments by CEO Vladislav Baumgertner that prices could drop as low as $250/mt FOB, instead saying near-term prices are expected to be in the $300-$400/mt CFR range. However, Uralkali told analysts that while prices could drop below the $300/mt mark, that such a number would not be sustainable.

Going forward the next two years, Uralkali said it will particularly focus on fast-growing markets such as Latin America, Southeast Asia, China, and India, which have historically accounted for about 60 percent of company sales.

The potash and stock markets have been whipsawed back and forth on each news tidbit that has developed since the July 30 announcement, as well as the Aug. 26 arrest of Uralkali’s Baumgertner by the Belarus authorities. Any suggestion by Russian Prime Minister Vladimir Putin, Uralkali Chairman Alexander Voloshin, or Belarus President Alexander Lukashenko that the Uralkali/Belarus break-up may or may not be resolved has caused a knee-jerk reaction in the markets.

In a conference call, Voloshin said he never meant to suggest that Uralkali was amenable to reunification. He said he simply meant to say “Never say never.” Under the circumstances, however, he said from a practical po

Sulfur

Market Watch, Sulfur, Tampa, U.S. Gulf, Vancouver, West Coast

Tampa: Sulfur remained very quiet last week, with nothing new to upset the supply/demand cart. World prices remained depressed, and that trend could continue when negotiations for fourth-quarter Tampa molten sulfur prices get underway next month.

Refinery operating capacity rates last week increased by 0.8 percent from the previous week, to 92.5 percent from 91.2 percent. That was significantly more than last year’s 84.7 percent for the same period, and also well above the four-year average of 88.1 percent.

The molten sulfur price delivered to Tampa for the third quarter was set at $95/lt, effective July 1.

U.S. Gulf: The price range for Gulf prill was $70-$80/mt FOB. Less was going to prillers, which was boosting supplies of molten sulfur to Tampa.

Vancouver: With sulfur prices at China returning to the $90/mt level, prices at Vancouver remained low in the $60-$75/mt FOB range last week. That situation will not improve until the China price moves up.

West Coast: There was still no change in prices on the West Coast, which remained in the $63-$78/mt FOB range.

Benelux: The Benelux price range for the third quarter was $140-$155/mt.

ADNOC: The ADNOC price was $90/mt FOB.

Potash

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

U.S. Gulf: Potash barges were put between $345-$355/st FOB.

Eastern Cornbelt: The potash market in the Eastern Cornbelt was steady at $390-$400/st FOB regional warehouses.

Western Cornbelt: Potash continued to be quoted in the $385-$400/st FOB range, with the low in southern Missouri and the upper end in Iowa. One contact quoted the red granular market at the $395/st FOB level in his area last week.

California: Muriate of potash pricing was flat and untested at $500-$510/st FOB and $510-$520/st DEL in California.

Granular sulfate of potash pricing had reportedly slipped to $650-$655/st FOB in California, down $10-$15/st from last report, with standard grade SOP quoted at $638/st FOB on a spot basis. Delivered SOP was pegged in the $635-$645/st range in the state.

The K-Mag market was reported at the $430/st FOB level out of warehouses from Fresno south.

The dealer market for crystalline potassium nitrate was unchanged at $950/st FOB for bulk and $1,020/st FOB for bags.

Pacific Northwest: Potash pricing continued to slip. Sources quoted the regional market at $455-$460/st FOB and $450-$460/st rail-DEL in the region, down another $15-$30/st from last report.

The potash market FOB Utah mines was quoted at $370-$375/st, well below reference levels in the $415-$420/st FOB range.

The K-Mag market was reported at $461-$481/st FOB in the Pacific Northwest, with sources reporting continued tight supplies.

Western Canada: The regional potash market was steady at $460/mt FOB Saskatchewan mines to Canadian customers, with pricing out of Western Canada warehouse locations reported in the $468-$491/mt FOB range, depending on location and supplier.

India: The chaos in the potash industry, combined with the weakening rupee, is leading Indian buyers to defer purchases.

The Indian government maintained the official selling price of $277/mt to the farmers, but with a subsidy of $210/mt instead of last year’s $268/mt.

Besides India, China is also holding off on its potash purchases until the global market settles down. During the first eight months of this year, India imported 1.9 million mt, or about 48 percent of what is required under its contracts.

Even before the Uralkali split hit the market, India was considering taking fewer tons than expected because of the falling value of the rupee.

While demand for potash is expected to be strong in India, it does not have the political baggage that faces urea importers.

Phosphates

California, Central Florida, Eastern Cornbelt, Market Watch, Pacific N.W., Pakistan, Phosphate Rock, U.S. Exports, U.S. Gulf, Western Canada, Western Cornbelt

Central Florida: No new prompt, spot sales were found out of Central Florida last week, but the fall application season should begin in the next few weeks. In the meantime, however, dealers continued to hold off making buys.

The Central Florida DAP market remained at a flat $410/st FOB, with MAP bringing a $20/st premium over DAP.

U.S. Gulf: Phosphate barge prices on the NOLA river system continued to slide last week, although NOLA DAP barge paper prices for October and November were edging up as the week advanced.

There was still no big rush to buy from phosphate producers or traders. The start of the fall application season will coordinate approximately with The Fertilizer Institute’s World Fertilizer meeting in Montreal Sept. 22-24, so some deals could be reached there.

Interestingly, the recent announcement that India was buying about 160,000 mt of DAP from China did not seem to have an impact on the NOLA DAP market, even though the price was much lower than what the Indians had been paying.

One source said the deal was not really a new sale, but rather a price adjustment for a deal previously made with China. The Indian rupee has been falling, and India had been working hard to renegotiate its existing contracts.

Many feared that it would cause a sharp decrease in international phosphate prices, but that had not happened by late last week.

Unless rains come soon, low water on the Mississippi River could again become a navigational problem. Lacrosse, Wisc., located in the upper reaches of the river system, set a record for the least amount of rainfall from July 1 through Sept. 10. The city recorded only 2.4 inches during that period, besting the previous record of 2.52 inches.

On the futures market, crop prices were varied but mostly up from the previous week. Corn for December 2013 was $4.6425/bushel, up from $4.61/bushel for the previous week, while corn for December 2014 firmed to $5.03/bushel from the prior week’s $4.9775/bushel.

The soybean price for November 2013 moved up to $13.89/bushel from the previous week’s $13.675 bushel, while soybeans for November 2014 slipped slightly to $11.9325/bushel, compared with $11.945/bushel one week earlier.

Wheat for December 2013 moved up to $6.93/bushel from the previous week’s $6.893/bushel, while wheat for July 2015 fell just slightly, to $6.89/bushel from $6.8925/bushel at last report.

The NOLA DAP barge price was reported at $365-$370/st FOB based on actual sales, compared with the previous week’s wider range of $367-$382/st FOB. MAP prices were in the $390-$400/st FOB range, down from $400-$410/st FOB a week earlier.

MAP was in short supply late last week, and several sources said they were waiting to see what would be available from the Koch import of OCP material. The expectation was that it could force MAP prices down somewhat.

Eastern Cornbelt: DAP was quoted at $435-$455/st FOB in the Eastern Cornbelt, with the low out of river locations and the upper numbers inland. MAP was $20/st higher than DAP.

10-34-0 remained in a wide range at $425-$475/st FOB in the region.

Western Cornbelt: DAP remained flat in the $425-$435/st range FOB regional warehouses, with the low reported in southern Missouri and the upper end in northern Missouri and Iowa. MAP was $20/st higher than DAP.

A Missouri source said growers are holding off on preplant winter wheat applications until the region gets some moisture. “We won’t do anything with wheat until we see some rain,” he said. “Last year we had a bad crop, but then we got some late summer rains, which sparked a great fall season. Right now, as dry as we are, the prospects aren’t good for fall.”

Sources said DAP out of the

Ammonium Sulfate

Ammonium Sulfate, California, Eastern Cornbelt, Market Watch, Pacific N.W., Western Canada, Western Cornbelt

Eastern Cornbelt: Granular ammonium sulfate remained at $270-$280/st FOB and $280-$290/st DEL in the Eastern Cornbelt.

Ammonium thiosulfate was steady as well at $345/st FOB.

Western Cornbelt: Granular ammonium sulfate remained in the $250-$280/st FOB range, with the low reported in southern Missouri. Most dealer quotes fell in the $270-$280/st FOB range in the region last week.

Ammonium thiosulfate was pegged at $310-$345/st FOB, with the low in Nebraska and the upper end in Missouri. An Iowa contact quoted the common dealer price at the $325/st FOB level last week.

California: Ammonium sulfate pricing remained flat at $260-$310/st FOB in California, depending on location and supplier, with the low for standard grade on a spot basis and the upper end quoted out of the El Centro market.

IRM’s Tranzform and WesternPremium ammonium sulfate postings were steady at $290/st FOB Chico, with WesternStandard at $280/st FOB Chico and Woodland.

Ammonium thiosulfate was down to $300/st FOB Stockton for truck tons, a drop of $10/st from last report.

Pacific Northwest: The ammonium sulfate market remained at $250-$290/st FOB and $260-$300/st DEL in the Pacific Northwest, with the low for standard grade and the upper end for granular.

As of Sept. 9, ammonium thiosulfate pricing in the region had fallen to $310-$315/st FOB in Washington, down $20-$25/st from last report.

Western Canada: Granular ammonium sulfate remained at $380-$385/mt DEL in Western Canada.

Ammonium Nitrate

Ammonium Nitrate, California, Market Watch, Pacific N.W., U.S. Gulf, Western Cornbelt

U.S. Gulf: Ammonium nitrate barges continued to be under pressure, and were called $295-$300/st FOB.

Western Cornbelt: Ammonium nitrate pricing was down considerably, with sources quoting the dealer market at $355-$365/st FOB in the Western Cornbelt. Both the high and low ends of the range were reported in Missouri last week.

California: No market was reported for ammonium nitrate in California.

CAN-17 had reportedly fallen to $315-$328/st FOB in the state, depending on location and supplier, with the upper end reported in the El Centro market. Those prices were down roughly $20/st from last report.

Pacific Northwest: No market was reported for ammonium nitrate in California.

The CAN-17 market was unchanged at $338/st FOB Kennewick, Wash. With no fall demand for the product, sources said there was little reason for suppliers to adjust the price.

Nitrogen Solutions

California, Eastern Cornbelt, Market Watch, Pacific N.W., U.S. Gulf, UAN, Western Canada, Western Cornbelt

U.S. Gulf: The NOLA UAN market was generally quoted in the $225-$235/st ($7.03-$7.34/unit) FOB range, though more sources were sub-$230/st FOB than above last week.

Recent imports into the East Coast were put in the $250s/mt CFR.

Eastern Cornbelt: Illinois sources continued to quote the UAN-32 market at $285-$295/st ($8.91-$9.22/unit) FOB terminals, while UAN-28 pricing in Ohio and Indiana remained in the $260-$265/st ($9.29-$9.46/unit) FOB range, depending on location.

Western Cornbelt: UAN-32 pricing remained in a broad range in the Western Cornbelt, from a low of $275-$295/st ($8.59-$9.22/unit) FOB on the river to a high of $300-$310/st ($9.38-$9.69/unit) FOB inland.

California: The UAN-32 market remained at $335/st ($10.47/unit) FOB Sacramento and 335-$345/st ($10.47-$10.78/unit) FOB Stockton, with the upper end of the regional range pegged at the $365/st ($11.41/unit) level FOB El Centro.

Truck-delivered UAN-32 was quoted in the $360-$365/st ($11.25-$11.41/unit) range in California last week.

Pacific Northwest: The UAN-32 market was quoted at $340-$345/st ($10.63-$10.78/unit) DEL in the Pacific Northwest, down $5-$10/st from last report. Effective Sept. 9, IRM’s UAN-32 posting dropped to $340/st ($10.63/unit) DEL in eastern Oregon and Washington.

Western Canada: UAN-28 was steady at $339-$342/mt ($12.11-$12.21/unit) DEL in Manitoba, $342-$345/mt ($12.21-$12.32/unit) DEL in Saskatchewan, and $345-$354/mt ($12.32-$12.64/unit) DEL in Alberta and British Columbia.

Cargill Inc. – Management Brief

Management Briefs

Cargill Inc.’s board of directors announced Sept. 11 that it has elected David MacLennan, currently Cargill’s president and chief operating officer, as the corporation’s next CEO, effective Dec. 1, 2013. He succeeds Gregory Page, 62, who will serve as executive chairman. MacLennan, 54, will retain the title of president and continue as a director of the company. The transition is the result of the company’s ongoing succession planning with the board.

MacLennan joined Cargill in 1991 and has held various leadership positions within the financial, risk management, energy, and animal protein businesses in the U.S., London, and Geneva. Prior to joining Cargill, MacLennan was a senior vice president with LIT America in Chicago and served as president of Fixed Income Capital Markets at U.S. Bancorp Piper Jaffray in Minneapolis. He earned a bachelor’s degree from Amherst College and an M.B.A. from the University of Chicago.

Emery Koenig, 57, was elected as a vice chairman of the company. He continues to serve as Cargill’s chief risk officer. Since joining Cargill in 1978, Koenig has worked in a variety of commodity trading and risk management roles in the United States and Switzerland. Koenig currently serves as chairman of Black River Asset Management, an independently managed subsidiary of Cargill. He was elected to the Cargill board in 2010. He also serves on the board of directors of The Mosaic Co. He earned a bachelor’s degree in business management from the University of North Dakota.

Paul Conway, 56, will continue as a vice chairman of the company.

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