Fertilizer Futures
All Posts from September 16, 2022
Dry Fertilizer Barge Rates
| 9/16/2022 | Last Week | |
| Memphis | 16.00 | 16.00 |
| St. Louis | 17.00 | 17.00 |
| Peoria | 22.00-23.00 | 22.00-23.00 |
| Cincinnati | 26.00 | 26.00 |
| St. Paul | 28.00 | 28.00 |
| Catoosa/Inola | 31.00-32.00 | 31.00-32.00 |
UN Seeks to Reopen Russia/Ukraine Ammonia Pipeline; Trammo Cooperates
The United Nations (UN) confirmed that it is in negotiations to reopen the ammonia pipeline from Russia through Ukraine to the port of Odessa. International ammonia trader Trammo Inc., New York City, also confirmed that it had been approached by the UN to assist in the project.
“Trammo is happy to cooperate with efforts of the United Nations to allow shipments of ammonia from Ukraine to resume,” said Trammo CEO Ed Weiner. “Ammonia is an essential ingredient in fertilizer production. The absence from the market of ammonia formerly shipped through Ukraine has caused substantial hardship in countries dependent on that product. We believe that resumption of shipments will help to stabilize fertilizer prices worldwide and to avoid a global food crisis.”
The 2,471 km (1,535 mile) pipeline from Togliatti to Odessa can carry approximately 2.5 million mt/y of ammonia.
The ammonia, reportedly to be supplied by Russian producer Uralchem, would be purchased by Trammo at the Russia/Ukraine border. It would travel on down the pipeline and be exported from the ports of Odessa.
Russia has complained that its own products were not being exported under the Black Sea Grain Initiative that was signed on July 22. The Initiative was signed by Russia, Ukraine, the UN, and Turkey, and was to provide for the safe export of “grain, foodstuffs, and fertilizers, including ammonia.”
The 120-day Initiative expires in November, and UN Secretary-General Antonio Guterres said in an interview that it was clear that a successful ammonia deal could create conditions for the extension of the Initiative beyond November.
Market watchers offered quick concern over the safety of ammonia being transported through a war zone and whether ship owners would risk picking up the product (see Ammonia Market Section). However, if Russia is benefiting from the ammonia sale, it is arguable that it would avoid damaging the pipeline or vessels.
Tentative Agreement Averts Rail Strike at Last Minute; NH3 Shipments Resume after Earlier Embargo
Tentative contract agreements were reached early on Sept. 15 with the remaining three unions representing approximately 60,000 railroad employees, averting a potential rail strike that was scheduled to commence as early as Sept. 16. Earlier agreements were negotiated with nine of the 12 unions, which collectively represent roughly 115,000 rail workers.
“Thanks to the dedication of all members involved in the collective bargaining process, these new contracts provide rail employees a 24% wage increase during the five-year period from 2020 through 2024, including an immediate payout on average of $11,000 upon ratification,” the Association of American Railroads (AAR) announced on Sept. 15.
The news was welcomed by the fertilizer and agriculture industries, which had been pressing for a quick resolution ahead of the Sept. 16 deadline and had warned of catastrophic consequences if a strike or lockout occurred.
The resolution was also hailed by the Biden administration after Labor Secretary Marty Walsh met with the two sides on Sept. 14-15 to lead 20 consecutive hours of negotiations. Transportation Secretary Pete Buttigieg, Agriculture Secretary Tom Vilsack, and National Economic Council Director Brian Deese reportedly joined Walsh in working the negotiating table.
“The tentative agreement reached tonight is an important win for our economy and the American people,” President Biden said in a statement. “These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned. The agreement is also a victory for railway companies, who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come.”
The final agreements were reached with the Brotherhood of Locomotive Engineers and Trainmen Division of the International Brotherhood of Teamsters, the International Association of Sheet Metal, Air, Rail, and Transportation Workers – Transportation Division, and the Brotherhood of Railroad Signalmen.
The unions agreed to accept the raises and bonuses that a Presidential Emergency Board (PEB) recommended this summer (GM Aug. 19, p. 28), while the railroads agreed to ease attendance policies to allow workers unpaid days off for doctor’s appointment without penalty. The tentative agreement still needs to be ratified by respective unions through a vote by rank-and-file rail workers.
“Averting a strike Friday morning was priority number one,” said Corey Rosenbusch, President and CEO of The Fertilizer Institute (TFI). “We are hopeful that union membership will vote to approve the tentative agreement to ensure freight rail in the US continues to operate. As we move forward, it is also essential that rail carriers hire and retain the appropriate employee staffing levels to support a strong economy. Staff reductions in recent years have dramatically hurt rail service and made the rail-labor contract negotiations more challenging.”
In preparation for a possible strike, the six Class 1 freight railroads on Sept 9 announced that they had initiated steps to “secure” shipments of hazardous and security-sensitive materials, including anhydrous ammonia, resulting in those shipments being suspended or delayed beginning on Sept. 12.
The effect of the embargo on distribution was almost immediate, with sources telling Green Markets that some producers and ag retail suppliers immediately withdrew pricing and warned customers that the timely shipment of 4Q prepay ammonia tons was in doubt for the fall application season.
“For every day this uncertainty continues, we essentially lose five shipping days because of the ramp down and ramp up,” Rosenbusch said in a Sept. 14 statement. “If this situation is not resolved by tomorrow, it could quickly impact supplies for fall application and lead to a reduction in US production at a time when 70% of European production has been curtailed or ceased due to Russia’s shutoff of natural gas supplies.”
In its Sept. 15 statement after the labor agreement was announced, TFI said “most or all of the ammonia embargoes have been lifted as of this morning,” and stressed that ammonia shipments “must quickly resume.”
The Agricultural Retailers Association (ARA) also issued a Sept. 15 statement saying it was “encouraged and relieved” that a tentative agreement had been reached. ARA confirmed that its members were “already feeling the impact of a potential strike as railroad carriers started to cancel shipments of critical fertilizer products such as anhydrous ammonia and impacting domestic fertilizer production earlier this week.”
“The prospect of a rail strike would have further disrupted a supply chain that is already strained,” said ARA President and CEO Daren Coppock. “We hope the unions will quickly ratify the agreement so this cloud of uncertainty can be cleared away.”
ARA said it and other members of the Agricultural Transportation Working Group had sent letters to Congress on Sept. 8 and Sept. 13 urging lawmakers to intervene quickly if an agreement could not be reached by the Sept. 16 deadline (GM Sept. 9, p. 1). An AAR report warned that a rail shutdown could cost the US economy up to $2 billion a day.
The National Corn Growers Association (NCGA) also issued a statement on Sept. 15 calling the tentative agreement “a positive development” for farmers and the agricultural community. “We are thankful that the White House has announced a tentative agreement between rail carriers and union leaders and applaud the efforts from all parties to avoid this crisis,” said Brooke S. Appleton, NCGA Vice President of Public Policy.
The National Grain and Feed Association (NGFA) on Sept. 15 commended rail and union representatives for reaching a preliminary agreement as well. Earlier in the week, Bloomberg reported that Norfolk Southern Corp. had alerted customers that it planned to halt unit train shipments of bulk commodities, including grain, on Sept. 15 if negotiations remained stalled.
“The efficient operation of our rail network, which moves 25% of all US grain, is crucial to a functioning agricultural economy,” said NGFA President and CEO Mike Seyfert. “Resilient and reliable rail service is essential to the daily operations of NGFA members. We thank our rail industry partners for working to get this deal, and we encourage quick ratification by the labor unions.”
While no work stoppage will take place on Sept. 16, the threat of a labor strike or management lockout is still not over, according to a Sept. 15 Railway Age report, which confirmed that just two of the 12 unions have so far ratified the tentative agreements.
Railway Age noted, however, that all of the earlier tentative agreements contained “me too” clauses, which means the terms reached during the all-night bargaining session on Sept. 14-15 will apply across the board.
Jim Hicks and Co. – Management Brief
Jim Hicks, 83, founder of Jim Hicks and Co., Brea, Calif., passed away on Sept. 13. He was born on Aug. 9, 1939, and was a graduate of Purdue University in 1961. He started his ag career working for Chevron immediately after graduating and was transferred to California in 1968. Later, he started Western Ag Supply with a partner in 1975. Hicks eventually went off on his own and started Jim Hicks and Co. in 1983.
Hicks retired in 2015, but continued as a Board member for Ag in The Classroom and started endowments for agricultural scholarships at Purdue University, Cal Poly Pomona, and University of Arizona. He was a strong supporter of the Western Plant Health Association for over 40 years.
Hicks is survived by his wife, Neta; four children, Pat, Grady, Steve, and Jennifer; and daughter-in-law Marlene. A celebration of life is being planned in the near future.
Belarus Plans Small Potash Shipments for Iran via Dagestan, Report Says; Brazil Cargo on the Water
Belarus plans to start the transshipment of potash for delivery to Iran via Dagestan’s Makhachkala port on the southwest coast of the Caspian Sea, according to a Tass report, citing a port official. According to the executive, Belarusian potash producer Belaruskali OAO will ship over 8,000 mt of potash through Makhachkala port this month, with the first shipment of 4,000 mt expected to be delivered in the second half of September.
However, it is unclear what further Belarusian potash volumes are planned to be transshipped through Makhachkala, or if transshipments also will be made to other destinations.
According to Trade Data Monitor (TDM), Iran has never imported potash from Belarus. Iran’s total potash imports in 2021 were 98,079 mt, with most of those tons coming from China and Uzbekistan, according to TDM.
Dagestan is a Russian republic and Makhachkala is the only deep-water and non-freezing Russian port on the Caspian Sea.
Belaruskali in early July was reported to have started to ship products through Russian ports, according to Russia’s Kommersant newspaper, citing unidentified people familiar with details (GM July 8, p. 1).
According to recent line-up reports from World Shipping Alliance, about 28,000 mt of Belarusian potash has left the Russian port of Novorossyisk, destined for Brazil. The cargo departed in mid-July and is expected to arrive in Brazil later this month. It is Belarusian Potash Co.’s (BPC), the marketing/export arm of Belaruskali, first officially announced cargo for Brazil since February
Belaruskali in early July was reported to have signed a contract with St. Petersburg, Russia-based operator Keystone Logistics LLC to transship 2 million mt of potash in containers through 2023, according to Bloomberg, citing the Kommersant report.
Shipments were to be directed through the Petrolesport and Neva-Metal terminals in St. Petersburg’s Bolshoi Port, as well as through the Rybny Port in Vladivostok.
A delegation from Belarus in early September was reported to have met with Murmansk region authorities to discuss the transshipment of potash via Murmansk. The port has access to the Atlantic and Pacific Oceans via the Northern Sea Route.
Belarus has not been able to export potash – or NPKs – via Lithuanian rail since Feb. 1 following the Lithuanian government’s decision to end the railway transit contract between the country’s state-owned railway company Lietuvos Geležinkeliai’s (LTG) and Belaruskali over national security concerns (GM Jan. 14, p. 1). The decision followed the imposition of European Union (EU) and US sanctions on Belarusian potash trade.
Russia Says Gas Exports to Europe to Fall 66%
Russian natural gas exports to Europe will fall roughly 66% this year, according to a Bloomberg report, citing the Kremlin’s Deputy Prime Minister Alexander Novak, speaking on Sept. 15. The announcement comes even as Russian gas major PJSC Gazprom increases output.
Russian gas exports to Europe will fall by 50 billion cubic meters (bcm), according to Novak. Exports to the continent in 2021 were 150 bcm.
Russian gas accounted for some 40% of Europe’s supply before Russia’s invasion of Ukraine. But according to the report, that share has now fallen to just 9%.
Topsøe, First Ammonia Eye 5 M mt/y Green NH3 from Major Electrolyzer Deal
Danish technology provider Topsøe A/S, Copenhagen, and New York City-headquartered First Ammonia LLC on Sept. 14 inked a capacity reservation agreement to kickstart the global market for green ammonia.
The deal provides for First Ammonia’s initial purchase of 500MW of Topsøe’s solid-oxide electrolyzers (SOEC). The deal is expandable to up to 5GW over its lifetime.
“At 5GW, this would be the largest ever electrolyzer reservation of any type,” the companies said. “The production of 5 million mt/y of green ammonia would eliminate 13 million mt of CO2 emissions annually, the equivalent of taking 9 million petrol-fueled cars off the road.”
First Ammonia is developing a global network of modular, commercial-scale plants to produce green ammonia from renewable energy utilizing Topsøe’s SOEC technology. The first 500MW of capacity will be installed in First Ammonia’s green ammonia plants under development in the southwestern US and in Wilhelmshaven, Germany. Operations are planned for 2025, and are expected to be the world’s first commercial-scale, green ammonia production facilities.
According to its website, First Ammonia said the plant in Wilhelmshaven is expected to be fully operational in first-quarter 2025. In addition to rapidly rolling out green ammonia projects in Europe, the US, and Southeast Asia, First Ammonia said it intends to build the first combustion engine to run on 100% ammonia through its affiliate, First Ammonia Motors.
First Ammonia did not specify where the US plants would be. The company’s Head of US Project Development, Lee Raymond, has over 20 years of project management experience, the last 10 of which were spent developing ammonia and methanol plants in the US, most recently with the Pacific Coast Fertilizer project in Longview, Wash., which did not advance (GM Aug. 7, 2020).
First Ammonia is an affiliate of the $5.5 billion investment manager, Christofferson, Robb & Company, which has offices in New York City and London.
Topsøe’s SOEC manufacturing plant is to be built in Herning, Denmark, and has recently received the final investment go-ahead from the company’s board.
EU to Propose Mandatory Power-Demand Cut and Levy on Profits
The European Union (EU) is set to propose a mandatory target to cut the bloc’s power use, a step towards rationing, together with measures to funnel energy company profits to struggling consumers as it tries to stem the crisis.
The EU’s executive arm will propose its package this week, but it will still need to be unanimously agreed by Member States. However, there are deep divisions among individual states, and individual governments are likely to push for changes to the proposed plan
European Commission President Ursula von der Leyen’s original plan had included the controversial idea of trying to cap the price of imported Russian gas. That element has been postponed for more talks.
Gas prices are already easing, at least in part because of the bloc’s plans. Dutch TTF front-month gas (currently October), the European benchmark, was down 1.736% on the day on Sept. 15, closing at €214.1 a megawatt-hour (MWh). TTF front-month gas had hit €339.195 a MWh hit on Aug. 26 – close to the all-time high of €345 per MWh seen in early March.
Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
For additional details visit our Terms of Use.
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
For additional details visit our Terms of Use.